EU: External Action Service

Lord Pearson of Rannoch: asked Her Majesty's Government:
	What is the legal basis for the proposed European External Action Service.

Lord Triesman: My Lords, the European External Action Service was provided for in the EU constitutional treaty. We do not believe that it can be established without the coming into force of the constitutional treaty or change to existing treaties. Indeed, the Minister for Europe stated as much to the Lords EU Select Committee in his 3 November supplementary memorandum.

Lord Pearson of Rannoch: My Lords, I thank the Minister for that reply to this Question, which, for noble Lords who may not have devoured the subject with the relish it deserves, refers to the EU's new foreign service that is intended gradually to replace national services. Is the noble Lord aware that the redoubtable Daniel Hannan MEP has received a written answer from no less a personage than Mr Barroso, president of the European Commission, revealing that the service is going ahead and is being set up, under Article III-296(3) of the treaty establishing a constitution for Europe, to assist the EU's new Minister for Foreign Affairs? Do the Government therefore agree that the whole initiative is taking place, which it is, in a legal vacuum, because it depends for its legality on the European constitution which, as Mr Barroso has helpfully confessed in a letter to Mr Hannan, no longer exists?

Lord Triesman: My Lords, happily, I have neither received nor read the exchange of correspondence to which the noble Lord refers. I have little doubt that much correspondence of that sort is flowing around Europe, but I take the view that I have expressed in my Answer: it is not possible to inaugurate that service without the ratification of the treaty. Indeed, it would not be lawful to do so. I stand by that position, Her Majesty's Government stand by that position, and that is where we are.

Baroness Park of Monmouth: My Lords, what is the present cost of the EU missions in Japan and the United States, which are being funded very heavily—indeed, more heavily than any other embassy? How is that happening if it is not legal?

Lord Triesman: My Lords, that is an entirely different matter. The missions are not embassies at all. The EU, from the very beginning of its various incarnations, has had offices representing many of the aspects of its work as a single market in several countries. They most certainly do not override our missions, nor will they do so.

Lord Howell of Guildford: My Lords, as the Minister probably knows from travelling around, the missions call themselves embassies of the European Union. If there were a plan to extend those embassies, which are part of the European Commission, into part of an External Action Service, as proposed in the constitution, would Her Majesty's Government, quite aside from whether the constitutional treaty will come into force, be in favour of that extension into a full-blown diplomatic service?

Lord Triesman: My Lords, having travelled a bit, I can tell your Lordships that I have seen EU buildings with all sorts of labels on the outside—but they are not embassies. We do not favour the extension into that role and have made that clear. Neither do we favour the extension of a consular service that would be common throughout the whole EU, although some co-operation on major disasters would occasionally be helpful. We are intent on running and providing our own services to this Government, to the people of this country and to UK citizens when they travel abroad.

Lord Wallace of Saltaire: My Lords, will the Minister confirm that in some countries it is useful and practical to share facilities on the ground with other EU member governments and, in at least one case—in Tanzania, as I recall—to share premises with European Commission representation? That seems a logical and practical way forward when the United Nations has 192 member states and Her Majesty's Diplomatic Service is not capable within its financial limits of having British missions in all of them.

Lord Triesman: My Lords, it is without question sensible, on occasion, to share buildings for security reasons, as the security perimeter cannot be extended around a large number of buildings in all places where there are missions. It is sometimes sensible, for economies of scale, to share the building, but that does not mean that the missions all live in each other's pockets. It is also sensible on occasion, if I may say so having responsibility for consular services, to get a degree of co-operation when a major natural disaster hits and we want to optimise resources on the ground. That is not the same as saying that we depart one jot from our responsibility for the security of United Kingdom citizens.

Lord Tomlinson: My Lords, to save the noble Lord, Lord Pearson of Rannoch, from repeating this exercise yet again, will the Minister confirm that the Answer that he has given today is identical to the answer given at least three times in the past six months and will be the same next month, or in any subsequent month, until or unless the constitution has been ratified?

Lord Triesman: My Lords, I confirm that in every particular, but it would be hard for me to deny the noble Lord his enjoyment in repeating the question.

Baroness Knight of Collingtree: My Lords, is the Minister not aware that, although we welcome his clear and decisive words at the beginning of his Answer to my noble friend, some European nations really believe, or pretend, that the constitution is up and running. If he would only repeat his clear words not to this House but to Europe, perhaps we would get somewhere.

Lord Triesman: My Lords, the point that I made has been repeated throughout discussions in Europe. There are, of course, European nations that will continue to want to discuss future constitutional arrangements. Given the history of Europe and the enlargement of Europe, it would be surprising if that were not the case, but our position is our position. That is not always melody to those who hear it, but it is unequivocal.

Probation: Custody Plus

Lord Ramsbotham: asked Her Majesty's Government:
	Whether sufficient probation resources are in place to ensure the satisfactory introduction of custody plus later this year.

Lord Bassam of Brighton: My Lords, last year we introduced the community order and other new sentences in the Criminal Justice Act 2003. The probation service was well prepared for that substantial change to the sentencing framework. Probation staff will be equally well prepared when we introduce custody plus, which we will not implement unless we are satisfied that the probation service can cope with the additional workload. We shall keep the issue of probation resources under careful review.

Lord Ramsbotham: My Lords, I thank the Minister for that reply. In particular, I am grateful for the confirmation that custody plus may not be introduced unless the necessary resources are there. I say that with some concern, because the publicity states that, unlike now, when a typical offender,
	"will be released with neither support nor supervision",
	under custody plus,
	"he will be able to expect strict supervision, support and treatment in the community to help keep him . . . away from crime".
	That requires a great deal of work. Will the Minister kindly put in the Library of the House the business plan in which it is worked out how many offenders are likely to receive a custody plus sentence, what resources the probation service needs, whether the programmes are there and whether magistrates have been trained in the use of the order to make certain that this does not become another initiative that fails through lack of proper resourcing when it is finally introduced?

Lord Bassam of Brighton: My Lords, I am happy to place as much information as I can in the Library of the House about the background to custody plus. However, I can tell your Lordships' House this morning that, for the first time ever, adults aged 21 and over who are sentenced to less than 12 months' custody will receive probation supervision after release. We estimate that, in 2007–08, 49,400 offenders will be starting custody plus orders. The figures will obviously rise over time. It will be the first time ever that offenders will have received the sort of supervision that custody plus offers.
	Staffing in the probation service has increased on Labour's watch from 13,000 to 20,000 staff. We have increased our budget for the probation service by 61 per cent in real terms since 2000–01 and by 71 per cent since Labour came to office in 1997. We are fully committed to funding custody plus, as we can demonstrate—we have a history and a record that demonstrate our commitment to funding the service and to ensuring that it operates to the optimum.

Baroness Linklater of Butterstone: My Lords, is the Minister aware of the widespread concern in the Prison Service and the probation service that there is a real risk that the outcome of this apparently attractive custody plus disposal will be that an even greater number of people will go to prison for short periods because it may lower the custody threshold, just as the DTO led to a rise in the child prison population? That is despite the widespread recognition that short prison sentences serve no useful purpose. Also, will the Minister comment on the fact that the variety of the requirements that courts can include in the licence period is also likely to result in a rise in recalls to prison, particularly as enforcement action is carried out by executive recall and without recourse to a court?

Lord Bassam of Brighton: My Lords, I do not necessarily agree with either of the premises offered by the noble Baroness. I am pretty staggered that a Liberal Democrat Baroness should attack custody plus in such a way. It offers, for the first time, supervision for all offenders who are released from prison following short periods of imprisonment. I would have thought that that would be broadly welcomed in your Lordships' House.

Lord Corbett of Castle Vale: My Lords, I congratulate the Minister on the efforts being made by the Home Office and the Prison Service to better target the specific needs of those sentenced in our courts in a bid to cut down the still too high rate of reoffending. However, will my noble friend assure the House that every effort will be made to ensure that sentencers, particularly magistrates, are aware of the importance of custody plus and are encouraged to make proper and sensible use of it?

Lord Bassam of Brighton: My Lords, I am grateful to my noble friend for welcoming custody plus. He makes an extremely important point: it is vital that training is in place for all elements of the criminal justice system. Of course, magistrates are an important part of that.

Lord Peyton of Yeovil: My Lords, will the Minister take a look at Hansard tomorrow morning, particularly at the Question asked by the noble Lord, Lord Ramsbotham, which is quite detailed and which evidently was not anticipated by the Minister's advisers? Will he now seek an early opportunity to answer the very detailed and important questions that the noble Lord asked him, which he has not touched on this morning?

Lord Bassam of Brighton: My Lords, I always read Hansard the day after I have appeared at the Dispatch Box, particularly when the noble Lord, Lord Peyton, has asked me a question. I shall study it very carefully. I thought that I had answered the points raised by the noble Lord, Lord Ramsbotham, within the confines of his Question. However, as I said, it is a big issue, and we are committed to ensuring that there is maximum information about the scheme.

Lord Elton: My Lords, recent events have focused the attention of the nation, as well as of the House, on what happens when prisoners leave prison. Does the Minister agree that it is essential that, when this is initiated, it actually works? Can he tell us what the effect on the caseload of probation officers will be? Simply saying that a chap is under probation supervision means either that he is seen once a week or that he has supervision for several hours a day. Both look the same in the statistics, but they are very different when it comes to how prisoners behave on release.

Lord Bassam of Brighton: My Lords, the noble Lord, with his experience of the service, speaks with some authority. He is absolutely right: we have to study carefully the impact on caseload. The estimate is that the custody plus process will lead to something like a 15 per cent increase in caseloads. That is against a significant increase in caseload work undertaken by the probation service between 1997 and 2005. There has been an increase of some 19 per cent absorbed by the service at a time when the Government have been committing additional resources and ensuring that we have more probation officers in service.

Baroness Stern: My Lords, can the Minister confirm that the Government have set central targets for the probation service this year and that the targets include ensuring that 50,000 community service orders are completed and that 48,000 life skills courses and 17,500 accredited programmes are undertaken? Does he agree with me that the probation service would be more effective if it were liberated from those central targets and allowed instead to use its professional judgment and its knowledge of the offenders whom it manages to make the right decision in each case?

Lord Bassam of Brighton: My Lords, I certainly recognise the importance of meeting and matching professional standards and of allowing probation officers to get on with the job. That is the very reason why the Government are so committed to increasing the budget and resource available to the probation service. However, it is also right that we set targets. We should, as a matter of improving and modernising public services, set the threshold and expectations. Otherwise, why are we investing the money, if we do not have an expectation of what it will be spent on?

Zimbabwe: African Commission Report

Lord Blaker: asked Her Majesty's Government:
	Whether they have made representations to the African Union to encourage it to ensure that a response is received from the Government of Zimbabwe to the recent report of the African Commission on Human and Peoples' Rights.

Lord Triesman: My Lords, we welcome the African commission's report. It is a clear indictment of Mugabe's policies. It also shows the growing willingness of Africans to speak out over the situation in Zimbabwe. The African Union, at its last summit in January, gave Zimbabwe three months to respond to the commission's report. That deadline has now passed, and we do not believe that the Government of Zimbabwe have done so. We are encouraging the African Union to pursue the issue firmly.

Lord Blaker: My Lords, I thank the Minister for that Answer. I have it on good authority that Zimbabwe has not responded, even after three months. The story of the commission's report is a long one, partly because of prevarication by Zimbabwe and partly because the African Union has not pressed the matter. The African Union is doing a useful job militarily in Sudan, but it is falling down on human rights, good governance and the rule of law. Is it not perhaps time for those who wish success to the African Union to remind its leaders that the demise of the Organisation of African Unity with a less than satisfactory reputation was largely due to failure on those fronts?

Lord Triesman: My Lords, the noble Lord mentioned the African Union's role in Sudan. With the indulgence of the House, may I say that we are at the advanced stages of a very difficult negotiation? My right honourable friend Hilary Benn is involved in that discussion in Abuja, and I have placed a statement on the latest position in those negotiations in the Library of the House.
	With regard to the noble Lord's question, I believe that the African Union plainly could do more. The point is well taken, and it is an argument that we make. Other African leaders share that concern. There is frustration, which is plain in the statements made by President Obasanjo and, I am pleased to say, more recently by President Mbeki. Bad governance lies behind the crisis. If the African Union is not to repeat the mistakes of the past, it must deal with that as one of its undertakings. Indeed, that was part of the arrangements made at Gleneagles—it is part of what I regard as an African bargain.

Lord Acton: My Lords, have the British Government been in touch with the South African Government about the report? Can the Minister say what in a nutshell is South Africa's current policy towards Zimbabwe?

Lord Triesman: My Lords, we have certainly been in touch with the South African Government, although not on the specifics of the report. We have been in touch with them on the specifics of the IMF reports, the Tibaijuka report and other reports. There is profound disquiet—as, indeed, there should be—about events in Zimbabwe. There is a fear that, in the economic meltdown that is happening before our eyes in Zimbabwe, there is a real risk of many millions of people being displaced across the Limpopo into a very poor area of South Africa, creating probably unprecedented humanitarian and security issues for that country. South Africa is very concerned about that, and we need it to put still more pressure on Zimbabwe to prevent it.

Lord Chidgey: My Lords, given the welcome indications that the African Union is taking an interest in the internal affairs of its member states and the equally welcome establishment of the peace and security commission, are not there the strongest possible grounds now for the AU to press Zimbabwe even more strongly to respond to the African commission's report, particularly—I reinforce the Minister's point—given that the massive flow of refugees out of Zimbabwe into neighbouring countries is causing equally massive instability in those areas?

Lord Triesman: My Lords, I agree with the noble Lord. There is every reason for the African Union to insist that the time that it allowed for a response has elapsed and that a response is now due. The international community is owed no less.

Baroness D'Souza: My Lords, given that Zimbabwe has not put itself forward as a candidate for membership of the new Human Rights Council, does the Minister agree that the human rights violations in Zimbabwe should now be roundly condemned? Will the Government make efforts to ensure that Zimbabwe will be high on that new body's agenda?

Lord Triesman: My Lords, we will do that. The point has been made in your Lordships' House that traditionally there has been resistance on the part of African countries to criticism of their internal affairs by other countries. We must get past that to a point where a mature regional body decides that it has responsibility for human rights and security. That is the expectation of the international community as set out in the Gleneagles statement.

Baroness Whitaker: My Lords, will my noble friend confirm that, in its sponsorship of NePAD, the African Union has achieved more for good governance throughout Africa than almost any other organisation?

Lord Triesman: My Lords, NePAD has made significant strides. The peer group reviews in some African countries are beginning to show the benefits. It is worth saying that, overall, Africa is moving forward with more democracy and more open and representative democratic institutions, but, of course, it is legitimate for Members of your Lordships' House to identify areas in which the problems are acute and where they must be resolved.

Lord Alton of Liverpool: My Lords, will the Minister expand on the remarks of the Foreign Secretary on 26 April that he hoped that China would play a role in helping to resolve the problems in countries such as Zimbabwe, Sudan and Burma? Given China's track record on human rights issues, does the Minister think that that is a realistic expectation? Has there been a response from that Government?

Lord Triesman: My Lords, there has not as yet been a significant or public response, but it must be the case that a country that is as influential as China is in the economic affairs of many continents—not just in Africa—must assume the full responsibilities that come with being a giant player in world politics. We are urging that on the Chinese. The first indications that they wish to have a dialogue on, for example, Africa as a whole are an encouraging start. Everybody who has dealt with China knows that these things do not happen overnight.

Baroness Symons of Vernham Dean: My Lords, if the talks in Abuja are successful, as we all very much hope that they will be, will the Minister be in a position to make a further Statement to your Lordships' House at some point next week?

Lord Triesman: My Lords, if there is either success or failure, it will be well worth making a further Statement in your Lordships' House because I know the depth of concern that there is about Darfur and the absolute importance of achieving peace and security and the prospect of people living a decent life in that part of Africa.

Embassies: Congestion Charge

Lord Dubs: asked Her Majesty's Government:
	What discussions they have held with representatives of those embassies which have declined to pay the London congestion charge.

Lord Triesman: My Lords, the FCO has had discussions with representatives of the United States, German and Swiss embassies and members of the African Union group who have declined to pay the London congestion charge, and we have urged them to pay. We have also written to the top 10 worst offenders identified in the Written Ministerial Statement issued on 12 December urging them to pay their outstanding penalties and to continue paying the charge. Since then, the United Arab Emirates has come to an agreement with Transport for London for payment of the outstanding penalty charges and resumed paying the congestion charge.

Lord Dubs: My Lords, I welcome the progress that has been made since the House discussed the matter way back last January. Will my noble friend confirm that among the good payers are China and Saudi Arabia; that British diplomats always pay tolls and similar charges; and that it is unacceptable that double standards should be applied and that the United States—our main ally—should be one of the worst offenders? What further help can we give to my noble friend, apart from making a fuss here, so that the United States sees sense?

Lord Triesman: My Lords, there are a number of questions there. It is true that China and Saudi Arabia have paid their congestion charges. We believe that they are tolls, and we regard them as such in our embassies abroad. We pay them because we regard that as proper and lawful conduct. The help that your Lordships can bring to the matter is a trickier question. I would ask that, if you do tender such careful assistance, we do not in the course of it dispense with all our essential alliances.

Lord Marsh: My Lords, I sympathise with the Minister on the issue, which is not new. Over the years nothing successful has happened on it under either party. Would it not concentrate ministerial minds if responsibility for these matters were transferred from the FCO to the Treasury?

Lord Triesman: My Lords, I thank the noble Lord, and I look forward to the discussion with the Chancellor of the Exchequer—I think. We handle relations with foreign missions, and I have not noticed that other government departments are eager to take up that task. However—to take a more serious view—we try to ensure that legal sums are paid. The understanding is that this is not covered by the Vienna arrangements and that people should abide by the same arrangements as we do when we face similar charges abroad.

Lord Howell of Guildford: My Lords, the noble Lord, Lord Marsh, may have a point. Is not the debate about whether it is a charge or a tax? Does the Minister agree that the rather foul-mouthed observations of the Mayor of London, Mr Livingstone, about the Americans have not helped the matter and are probably delaying a sensible settlement of it? Will he, finally, bear in mind the thought that the behaviour of embassies—not just our own but others in cities such as Singapore where a charge is made—might help produce evidence that would convince the Americans and others that it is a charge and that they should pay it?

Lord Triesman: My Lords, I hope that the accumulation of evidence that it is a charge rather than a tax will help the Americans and others in the top 10 to come to that conclusion. I probably ought to be careful before making public comments on the statements of Mr Ken Livingstone. I have done so once or twice in the past. I cannot say that it has always left us in a dignified relationship.

Lord Berkeley: My Lords—

Lord Wallace of Saltaire: My Lords—

Lord Rooker: My Lords, it is the Lib Dems' turn.

Lord Wallace of Saltaire: My Lords, the noble Lord, Lord Rooker, is always immensely helpful on the government Bench.
	Will the Minister confirm that there has been some criticism in the United States, particularly from the New York Times, about the position of the US Embassy? That position has worsened in the past six months because the Mayor of New York does his best to enforce tolls and charges on all diplomats there and the British are regular and honest payers in New York. The lack of reciprocity that we see in particular from the US embassy under the new ambassador does not bode well for the spirit of mutual co-operation between two very close allies across the Atlantic.

Lord Triesman: My Lords, I would like to feel that the fundamental interests that we share with the United States throughout the world will not be overly shaken by the matter. Having said that, I concur with the view that we should all abide by the appropriate local laws. Transport for London is taking, as it should, a leading role in trying to secure the sums. We are saying to all foreign missions that they must abide by the payment of tolls. They are not taxes, and they are not covered by the Vienna convention.

Lord Berkeley: My Lords, is it not time to take the bull by the horns and for my right honourable friend the Prime Minister to phone up his friend in the White House, Mr Bush, and say, "I helped you invade Iraq and it is now payback time. Pay up or I will clamp all your embassy cars".

Lord Triesman: My Lords, if we are to determine our policy on Iraq on that basis, I fear that we are in worse trouble than I had supposed.

Lord Pearson of Rannoch: My Lords, is it worth the Government having a word with our masters in Brussels?

Noble Lords: Oh!

Lord Pearson of Rannoch: My Lords, may I also remind your Lordships that gratuitous ridicule is the mark of the man who has lost the argument? Will the Minister have a word with the European Union? European Union employees in this country have been offered complete diplomatic immunity, together with their mistresses, dogs and hangers-on.

Lord Triesman: My Lords, I will not get into either masters or mistresses in Brussels. Of the top 10 offenders—all of whom have diplomatic cover, as have European diplomats—none is from European countries. If there is a genuine grievance, at least let us point in the right direction.

Business of the House: Standing Order 47

Lord Rooker: My Lords, I beg to move the first Motion standing in the name of my noble friend on the Order Paper.
	Moved, That Standing Order 47 (No two stages of a Bill to be taken on one day) be dispensed with on Monday 8 May to allow the Northern Ireland Bill to be taken through its remaining stages that day.—(Lord Rooker.)

On Question, Motion agreed to.

Business of the House: Debates Today

Lord Rooker: My Lords, I beg to move the second Motion standing in the name of my noble friend on the Order Paper.
	Moved, That the debate on the Motion in the name of the Lord Turnbull set down for today shall be limited to three hours and that in the name of the Viscount Montgomery of Alamein to two and a half hours.—(Lord Rooker.)

On Question, Motion agreed to.

Company Law Reform Bill [HL]

Lord McKenzie of Luton: My Lords, I beg to move the Motion standing in the name of my noble friend Lord Sainsbury of Turville on the Order Paper.
	Moved, That the amendments for the Report stage be marshalled and considered in the following order:
	Clauses 1 to 234 Schedule 1 Clauses 235 to 630 Schedule 2 Clauses 631 to 657 Schedule 3 Clauses 658 to 743 Schedule 4 Clauses 744 to 760 Schedules 5 to 7 Clauses 761 to 771 Schedule 8 Clauses 772 to 779 Schedule 9 Clauses 780 to 811 Schedule 10 Clauses 812 to 814 Schedule 11 Clauses 815 to 836 Schedule 12 Clauses 837 to 846 Schedule 13 Clauses 847 to 858 Schedule 14 Clauses 859 to 880 Schedule 15 Clauses 881 to 884.—(Lord McKenzie of Luton.)

On Question, Motion agreed to.

Pensions

Lord Turnbull: rose to call attention to issues relating to pensions in the light of the second report of the Pensions Commission; and to move for Papers.
	My Lords, like energy, which we debated a few weeks ago, pensions were for too long in the "too difficult" tray. I was therefore delighted to have my suggestion for a debate on pensions accepted, and I am delighted to open the debate. I look forward to the maiden speech by the noble Lord, Lord Hastings of Scarisbrick. First, I declare my interests, as I am shortly to become a director of Prudential plc, and I am a part-time adviser to Booz Allen Hamilton, which has the Pension Service as one of its clients. Also, like many—perhaps most—in the House, I am a pensioner, receiving a defined benefit public sector pension.
	I thank the noble Lord, Lord Turner of Ecchinswell, for the three years of work that he and his fellow commissioners did into the future of pensions in this country. They have produced an impressive report. Originally, he was asked to advise only on,
	"whether the existing system of voluntary private pensions would deliver adequate results".
	Despite that, he concluded that looking at private pensions in isolation made no sense and that state and private provision were so entwined that they should be looked at together. He was correct to take this Nelsonian approach to his terms of reference, although I suspect that this explains why some parts of government were not originally welcoming.
	The noble Lord's first conclusion was that,
	"the current voluntary private funded system, combined with the current state system, is not fit for purpose looking forward".
	For years we have comforted ourselves with the notion that our pension arrangements were more soundly based than those in continental Europe. The noble Lord has demonstrated conclusively that, although we may not have the same problem as France, Germany or Italy, we do have a problem. Our continental neighbours have promised that too much would be provided by the state; that amount is projected to rise to 13 to 14 per cent or more of GDP. It does not follow that we are comfortably placed by planning for provision to rise from around 6 per cent to just over 7 per cent. Long before we get there, we will have discovered that pension provision is unacceptably low. While others may have over-promised, our problem is that we are under-providing.
	The noble Lord, Lord Turner, also demonstrates that while private saving becomes even more necessary when public provision is low, the incentive to save will be undermined by over-reliance on means-testing. Many people also believed that we were better off as we had a larger proportion of funded schemes and so had, in some senses, set the money aside in advance. As the noble Lord, Lord Eatwell, has demonstrated to me algebraically, the cumulating financial assets in one's working life profit one little if the successor generation is not saving. When we oldies try to realise our investments, we do not secure much value for them, as many annuitants have discovered to their cost.
	The Government need to accept that, despite the undeniable progress to date in reducing pensioner poverty, continuing along the current trajectory will not suffice. They must resist the temptation described in Genesis:
	"And God saw everything that He had made, and, behold, it was very good".
	The first recommendation of the noble Lord, Lord Turner, is that if excessive dependence on means-testing is to be avoided, the state pension needs to be raised in line with earnings. I confess that in my time at the Treasury I enthusiastically supported breaking the earnings link. One reason why I have now come to support the link is that we are now going to spend much longer in retirement—often 25 to 30 years, occasionally even more. An economy that grows at 2.5 per cent per year over 25 years will be nearly twice as rich. Will those who have retired not share a bean of that extra prosperity?
	This leads to the next step in the noble Lord's argument, which is that to make this affordable the retirement age should rise over time to around 68—an increase close to that projected in life expectancy. The net increase in public expenditure beyond that already projected is about 0.5 per cent of GDP, spread over 40 years. A government that committed themselves on breakfast television to raising the proportion of GDP spent on health by 3 per cent over eight years cannot plausibly argue that this is unaffordable.
	The noble Lord then turns to private provision. There are those who argue that the traditional glory of the employer-based, defined benefit, final salary scheme could be restored "if only". The most popular "if only"s are the restoration of the ACT credit, the removal of FRS 17, or a different approach to pensions regulation. Such schemes are in more trouble than can be put right by simple changes of that kind, for several reasons.
	First, our economic structure is now changing so fast that a system of pension provision founded on the employer will always struggle. Of the companies in the FTSE 100 when it was set up in 1984, only 38 are still in the index 20 years later. Extrapolate that over a combined 70 years as worker and pensioner. This is compounded by the greater job mobility that a well functioning labour market requires.
	Secondly, there is the problem of matching assets and liabilities. In a classic DB scheme, the investment risk and longevity risk fall in the first instance on the employer, who in turn cannot alter the benefits paid to those already retired; the employer can negotiate only with current employees, and generally only in relation to future service. It is possible, through indexed gilts, to hedge the risk of inflation, but not, as yet, the risk of unexpected changes in longevity, although some of our finest minds, not least the Governor of the Bank of England, are studying how this risk could be hedged. Getting the best possible basis for projecting life expectancy will become so important that I recommend that we look again at the best arrangements for achieving that.
	Then there is the problem of returns. The conundrum seems to be that one can earn enough to fund a final salary scheme only by running risks that the regulator and trustees find unacceptable. In addition, FRS 17 and pensions regulation in effect make the pension fund a liability in the company's balance sheet, whereas we always used to think that the pension fund should be separate from the company. The result is that companies find that their risks are greater, their responsibilities more onerous and their room for manoeuvre limited. They not only carry the can for shortfalls in their own pension schemes but now also have to carry the can for companies that have perished. It is small wonder that many feel that the pension fund is running the company and that they should look for a way out. In addition, the final salary basis of pensions becomes problematical when we work longer and it becomes less likely that our final years are our best paid.
	The noble Lord, Lord Turner, is right to argue that for lower and middle income earners at least we must consider alternatives to the traditional employer-based DB schemes—hence his proposal for a national pension savings scheme with auto-enrolment. Some have baulked at the so-called "soft compulsion", but work done by the Oxford Institute of Ageing and HSBC indicates a surprising degree of support. Others worry about the costs to business, but in a competitive labour market much of the cost will be passed back on to wages and, for the smallest companies, it should be possible to provide some phased or time-limited relief.
	The noble Lord, Lord Turner, argues for a single collection mechanism, but a number of competing schemes are being proposed for the degree of choice offered to savers and for the way in which the funds are managed. I do not have time to go into the pros and cons of each; I will have to leave that to others in the debate. I shall just register two points. First, in a world where returns are low and the incomes of the saver are modest, I agree with the noble Lord, Lord Turner, that minimising administration costs makes a crucial difference to the outcome. Secondly, the governance arrangements have to be robust to prevent this becoming another 1909 road fund sucked into the vastness of public finances.
	I conclude with some observations on the deal which the Government have offered some public sector groups whereby existing staff, which could include someone recruited last week, will enjoy a preserved right to collect a full pension at 60, whereas new recruits will have a pension age of 65. That deal has been subject to much abuse in the press, in language which would not pass this House's conventions on asperity. Rather than repeating that language, I will merely say that the criticism is entirely justified. It unfairly divides many public sector workers from millions of others in the private sector and millions in receipt of state pensions by shielding them from the painful adjustments that the others will have to accept. As a political deal, it is a failure, because it pits one public sector group against another. Those in local government, whose pensions are fully funded so that the changes cannot be fudged, are resentful that they are being singled out. It is divisive between young people. One who joins the Civil Service, say, just after the change will find that his pension age 40 years later is five years higher than that of his friend who joined a year earlier. That will not survive an age discrimination case for 10 minutes.
	It appears that Ministers have bought the trade union argument that staff joined with an expectation about the pension arrangements and that therefore it is wrong, retrospectively, to reopen one element of the deal. That is a fallacy. The deal is not defined; it is open-ended, because the number of years for which the pension is paid floats free. In 30 years, the length of time over which a Civil Service pension is expected to be paid has risen by 10 years. So over time the deal has unexpectedly become more and more generous—that is, expensive for the taxpayer. The unions want to hang on to the good bits—the same accrual rate and the same pension age—while pocketing this growing windfall. That deal cannot be defended and I hope that the Minister will not attempt to do so.
	I need to wind up. There are many issues that I have not been able to address—the implications for women, encouraging a longer working life, annuities and tax—but I am confident that others will be ready to speak on those points. My final observation is that pensions are a long-term business: it is often 70 years from first payment in to last payment out. People need to understand the choices that they face, hence the need for clarity and transparency. People need stability in the framework so that they can plan with confidence. All that points to securing the greatest degree of political consensus. I hope that our debate can begin that process. I beg to move for Papers.

Baroness Dean of Thornton-le-Fylde: My Lords, I thank the noble Lord, Lord Turnbull, for initiating this important debate. It may have been in the basket of "too difficult to deal with" for a long time, but we cannot avoid dealing with the issues now. I look forward greatly to listening to the maiden address of the noble Lord, Lord Hastings of Scarisbrick. The debate will be greatly enhanced by the participation of the noble Lord, Lord Turner of Ecchinswell. Along with Jeannie Drake from the TUC and Professor John Hills from the London School of Economics, he has carried out a great service to the citizens of this country, which will be recognised more as the years go by when we are dealing with pensions issues.
	The first page of the first edition of the report issued by the noble Lord, Lord Turner, states that the public policy and individual behaviour change needed should have started 20 years ago. How right he is. About 20 years ago, I was involved with the Carnegie report on the third age. The issues that this report tackles were covered in that report then. It dealt with the fact that people are living longer and it identified the reduction in the proportion of retirement income being derived from the state pension and the fact that that was going to continue to be eroded. The issue of groups of pensioners—women in particular—not being able to look forward to any kind of comfortable retirement because of poverty was covered in that report nearly 20 years ago.
	One of the other issues in the report, although it is not subject of the debate today, was age discrimination. Interestingly, the report called for a voluntary scheme or, if that did not work, a legislative scheme to prevent age discrimination. Last month, some 20 years later, we eventually got the law from a Labour Government. We cannot wait 20 years for action to be taken on the Turner report. Pensions, after the home, are the single biggest investment that any one of us makes. Money put into a pension scheme over the years is of a higher value than a home, so, whether it is a state pension fund or a private pension fund, people are entitled to expect that at the end they can have confidence in what they have been investing in over their lifetime. The blunt fact is that, if that is eroded, at the point of retirement there is nothing that an individual can do about it: it is too late.
	Public confidence in occupational pension schemes has been severely eroded over the past years. I know that in the political debate people blame one another for the issues. Some say that the problem lies with Gordon Brown taking out the windfall tax. Others say that that was not the reason; the problem was the Pensions Act in the 1990s, when we had pensions holidays and surpluses were being paid back to employers. There is a raft of reasons, including the equity market decline.
	Today, many schemes—final salary schemes in particular—are in severe deficit. They are covering a reduced number of employees. Many individual employees are told that they cannot join the defined benefit scheme because it is closed and many of those schemes are currently being looked at as to whether they will continue to accrue benefits. Employees are told that they need to get an individual or indeed a money purchase scheme, but many people are not doing it. That is stacking up the problems that we not only have today but will face in the future.
	The statement from the Pensions Regulator over the past week is of great concern. He said that between 150 and 300 of our largest schemes were high-risk schemes. Companies are currently making annual contributions in addition to the normal pension contribution to the deficits within their company fund. What happens if those companies go belly-up? What happens if they just go bankrupt? Where would that leave the pension scheme as regards the contributions in it?
	We read last week that Kvaerner UK, which has a deficit of £252 million, has agreed to pay the Pensions Regulator £101 million over five years. Who will fund the balance? The Pension Protection Fund must be concerned about that. What about the concern, which goes to the heart of the Turner report, about the many cases not covered by an occupational pension scheme, with no personal savings or pension scheme? The implications for state benefits in 20 years' time are enormous. If we do not tackle that issue now, we will leave a legacy to those who come after us, which frankly is irresponsible.
	In this complex, extremely concerning and worsening situation, we must not miss the opportunity that the pensions report gives to lay the foundations for a more secure future for our citizens. All of us will need to contribute our part, whether through paying taxes, working longer—I accept that part of the report—paying high contributions or having a compulsory savings scheme.
	I strongly welcome the report. Yes, there are unpalatable bits, such as raising the retirement age, but paragraph 11 of the executive summary of the second report makes it clear that that could be phased in. It is not as though it will all happen tomorrow, but we must now start laying the foundations to avoid poverty in future. It is a pity that the immediate publicity that the first report attracted was so negative and dealt just with compulsory savings. On reflection, the more serious commentators and media gave the report the credit it deserved for laying those foundations.
	There is so much in the report to commend it. Anyone who looks at it will know that a thorough job has been done; it has acted like a royal commission. Of course there are parts that we do not like, but so be it. There are parts of everything that we do not like; sometimes we must agree to things we do not like to get the better bargain at the end of the day.
	Overall the report is aimed at eliminating retirement poverty as far as possible. The issue of women, which receives substantial coverage in chapter 8, is an area of hope. Retired women living in poverty in Britain today have no hope, and, frankly, those approaching retirement have little hope either. In that sense, this report is the only show in town. It is the only game in town that we can take on for women to ensure that they do not live in the poverty that many of their colleagues experience today. Women's groups recognise that.
	Of course the report did not get a widely enthusiastic welcome, although it was welcomed in some quarters. The public are not stupid; they may not know the technicalities but they know the issues. It was interesting to see last week an HSBC-sponsored survey in which 21,000 people in 20 countries—we are not the only country covering this issue—recognised that we must pay more, have more private savings and work longer until retirement. Tinkering will not resolve this, nor will cherry-picking—I hope the Government do not do that. Only full application of the full report with full consensus will ensure that in future pensioners do not live in poverty.

Lord Hunt of Wirral: My Lords, we are very grateful to the noble Lord, Lord Turnbull, for giving us this opportunity to debate pensions. I congratulate him on his fascinating, scene-setting speech. I also agree very much with the points just made by the noble Baroness, Lady Dean of Thornton-le-Fylde. She is right that this is such a huge opportunity that we must not waste it. I, too, look forward to the maiden speech of the noble Lord, Lord Hastings of Scarisbrick, and to the speech of the noble Lord, Lord Turner of Ecchinswell.
	I should declare an interest, of course, as chairman of Beechcroft Financial Consulting, a fellow of the Institute of Actuaries, and a fellow of the Chartered Insurance Institute whose professional standards board I chair.
	In my brief remarks today, I intend to focus on the proposal to create a national pensions savings scheme (NPSS) rather than on reform of the state benefits system. I will also seek to draw the attention of Ministers to a number of practical issues I believe they may be in danger of underestimating as they set about designing and implementing an NPSS. I will also try to invoke the law of unintended consequences, which is all too well known to those of us who move in political circles.
	With specific regard to the NPSS, I am concerned that Ministers seem to be so sure that auto-enrolment will, of itself, achieve a dramatic improvement in take-up and persistency. I agree that auto-enrolment will be an important step in the right direction, turning inertia into an ally rather than an enemy, but it does seem to be naive to discount any danger that it might fall prey to the pressure of events. Inertia selling is dangerous if the Government do it too. Higher mortgage costs and credit card charges will inevitably come one day. Pension saving is highly discretionary and will in all probability be the first thing to be jettisoned in the battle to keep household finances afloat.
	Superficially this is about choice but I cannot say at this point that it is always about a really well informed choice. This surely points to the need for more help for consumer decision-making than Ministers currently seem to envisage. I would also add that low costs are virtuous and attractive but not if they result in too many doubting Thomases being excluded. The workplace is the natural area in which to provide advice and produce leverage to increase voluntary participation. Personal responsibility is a fine concept but not at the expense of real-world outcomes. Equally, the Government have to find some way of engaging with employers who have never sponsored a scheme before. I am afraid that the Pensions Commission's report is silent on that matter. It is all very well telling less well-off employees that the Government's new scheme means the employer will have to dock their pay for a pension unless they opt out, but who will help small employers to get started?
	The pensions industry has plenty of examples of working with employers to achieve active engagement and, hence, superior outcomes for employees, but how will this be sustained under current proposals? I understand that the Minister of State in another place accepts that an active employer role is fully consistent with personal responsibility. This needs to be reflected in the details of any scheme.
	It is disappointing that Ministers seem to be so dismissive of the risk of employers levelling down. Clearly, employers in some parts of the labour market have no intention of levelling down and have no vested interest in so doing, but some employers have a fixed budget for the company pension. What does the Minister think they are going to do if NPSS rules increase scheme participation from, say, 40 per cent to 70 per cent? Where will all that extra money come from? Is it not likely that the companies which are going to be affected will tend to employ those on lower wages? The Government need to think about how such a scheme would start up without causing unnecessary burdens or trauma.
	Present statistics show that some 6 million people could start saving on day one. That would be a splendid outcome but it will have to be a robust system in order to cope. It will be a robust economy that can tolerate 8 per cent of band earnings being diverted from spending to saving in one day. No doubt the Government have active plans for ensuring that the economy will be robust enough to stand that.
	In sum, these reforms are crucial but the difference between success and disappointment is to make sure that the practicalities are dealt with adequately. The value of the workplace to achieve practical success should not be sacrificed on the altar of personal responsibility. We do not live in an ideal world and, as Rab Butler once famously commented, politics is the art of the possible. Well, I hope that it will eventually be possible to achieve broad consensus on the right way forward—both within the Government and beyond—and that together we can create a system which is attractive, affordable and sustainable.
	The noble Lord, Lord Turner, has given us a good start. The Pensions Commission that he chaired is an excellent place to start from, but we need to move beyond that certainly and constructively before a growing concern really does become an insurmountable crisis.

Lord Kirkwood of Kirkhope: My Lords, I am pleased to be able to take part in this debate and I commend the noble Lord, Lord Turnbull, on securing it at this time. The moment of consideration is particularly apposite in advance of publication of the Government's White Paper. I listened carefully to the comments of the noble Baroness, Lady Dean, and the noble Lord, Lord Hunt, and I concur with both of them that this is a crucial opportunity which we must seize if we are to make progress in pensions policy for the longer term. I am sure that the department knows that.
	I have a perspective which comes from spending the previous two parliaments in the other place as chair of the Social Security Select Committee and the Work and Pensions Select Committee, as it then became. I was always frustrated at the seeming inability of the policy makers to bring together the private sector and the basic state pension elements in pensions policy. In the debates in the House of Commons it seemed to me that we argued about pensions only in terms of whether the state pension should go up more or less; then there were arcane debates, including on the Pensions Act 1995, about the technicality of private provision, which is an important element in the totality of pension provision. But those two elements were never adequately brought together and considered as a whole. The service that the noble Lord, Lord Turner, has given and the report that the Pensions Commission has produced means that for the first time—certainly in my experience of this important area of policy—we are able to look at the totality of provision. That is immensely welcome.
	Perhaps for the first time, the whole issue of demographic trends in pension provision is looked at adequately in the noble Lord's royal commission report. Indeed, the demographic trends over the 20 to 30-year period that we are looking at affects not only pensions. They will have a profound effect across all public policy for that period, because it is not just the fact that by 2050 there will be 50 per cent more people over 65—that stark statistic is true—but fertility and birth rates are collapsing; well, perhaps they are not collapsing but they are certainly falling consistently at the same time. The combination of those issues will affect not only health and pensions, but transport, education and all other important areas of public policy. This House will have to return to those issues in due course if we are to make proper provision for them.
	In passing, although the purview of the next 30 to 50 years is important, we must not forget that the present generation of retired citizens needs more help right now. It is right to make provision for 2030 and 2050, and, to be fair, the Government's introduction of the pension credit did a lot for pensioner poverty. I acknowledge that such a sensible step was necessary. However, it has led to the slightly longer-term, perhaps unintended, consequence of extending means-testing, which is causing concern. The Turner report properly addresses that point. We need to look again at minimum income standards and modest but adequate budgets. Age Concern and other important charities have been looking at that to ensure that the present generation of retired citizens is not completely forgotten during this important debate.
	Pension provision is far too complicated. We need far more simplicity and transparency. We have a system that ordinary mortals cannot understand, and it is impossible to make calculated guesses about what one's retirement provision will be unless one is a technical expert. That is regrettable. I hope that the reforms we are considering today will do something about that.
	I understand the position taken by the Treasury that in the long term Ministers should retain as much flexibility of finance as they can. In most other policy areas, that is proper and reasonable. However, if it is not clear what the Government are prepared to put into the system over the middle to longer term for pension provision, then we cannot get the planning, transparency and simplicity that are necessary to achieve the ends that the Pensions Commission sensibly set out in its recommendations.
	The Minister must go back to the Treasury. Money is always hard to find. The department's expenditure over the next Comprehensive Spending Review period has been cut by 5 per cent and the Treasury is expecting it to make some challenging staff reductions between now and 2008, so it is obvious that there is not a huge amount of cash readily available for any purpose. However, a case can be made for pension provision and pension planning being taken on a longer timescale and for making proper provision for those purposes in the present exceptional circumstances.
	The catalyst of the pension provision work has secured across the industry a wide measure of consensus and agreement about the general direction that the policy should now take. That is valuable, and I hope that the Government will understand that the consensus among experts can be translated, with a little work and good faith, into consensus across the political parties. If we can achieve that, I hope that the Government will respond and find a way of putting in place the different elements that are necessary to secure the core recommendations of the Turner commission report. Those are three in number, and I can do no more than list them. We must secure the future of the basic state pension. It must be increased from the current level of £84 to something like £114, which is the minimum pension guarantee level. That is an essential part of the core recommendations that the Pensions Commission identified. It also identified the role of means-testing in the long term as something that must be dealt with, and it made some sensible proposals. I do not think that they go far enough and that all they do is constrain the increase in means-testing. We should be trying to operate a system that reduces means-testing over the long term. The national pensions savings scheme is an essential part of that process. If we are going to have auto-enrolment, we must make it clear that if people are auto-enrolled, they must be sure that they will not be worse off when they retire at the end of their working lives. That is an important point.
	This package has to be taken as a whole. I hope that the Government will treat it as such. I hope they will understand that this is a once in a lifetime opportunity. I hope that we can encourage the department to be strong in the representations it makes to the Treasury. My main fear is that this package will be unpicked or substantially watered down. That would not be in the long-term interests of this country or of pensions policy in the United Kingdom.

Lord Hastings of Scarisbrick: My Lords, I am grateful to the noble Lord, Lord Turnbull, for creating the opportunity for me to make my maiden speech and for the wide remit of this debate, which is on pension issues. If I confine my remarks to that wide remit, I am sure that both the noble Lords, Lord Turnbull and Lord Turner, will see some sense in some of my reflections.
	The report of the noble Lord, Lord Turner, which I also commend, is full of practical and fiscal measures for the delivery of secured pensions. I introduce my remarks by saying that much of the current debate, which centres on the adequate financing of future capital, may miss the fact that a more holistic solution for people in older age might also consider the composite lives that people live. Having good bank accounts does not make people enjoy pensions in older life. Secured financial capital must go hand in hand with effective social capital. In addition to having enough, every survey with which we are very familiar tells us that deep security in older age comes more from the ability to be free in our communities and to have effective relationships than from feeling financially well off. Well-being cannot be bought, and it cannot be invested in in the long term, but it can be identified and created.
	Every survey tells us that fear of crime is probably the most crippling worry of people in older years. A report that has just been published by the Institute for Public Policy Research, called CrimeShare, assessed the impact of crime on older people as follows:
	"Many surveys have shown that people who have been victims of crime, or believe themselves at high risk of crime, go out less, have fewer friends, avoid public places, and speak to their neighbours less than people who feel secure. Home Office research has shown, in one particularly startling finding, that 43 per cent of people over 60 never went out after dark in their local area".
	The response of this House and of another place is frequently to reach for the legislative pen and the "something must be done" new law or, as a Member in another place who is also a QC recently described it, to succumb to the syndrome of "competitive legislative hyperactivity disorder". In the whole of the 19th century, there were 34 criminal justice Acts. In the first half of the 20th century, there were 11. Since 1950, there have been 63. Yet fear has crippled communities and eroded people's benefits from financial investments and better pensions.
	A reverse psychology is now needed. If we are to build social capital as well as secured financial capital, we need to think about how we save resources from the taxpayer and liberate them into other mechanisms. For the past 18 years, I have been a trustee of a charity called Crime Concern, and its chairman for 10 years. It was created to produce effective solutions. I shall give noble Lords one or two examples. The Birmingham safer neighbourhoods programme, which we have run in five wards in the city of Birmingham since 2002, was created to enhance the quality of life and encourage community. In the two years after its commencement in 2002, youth crime fell by 29 per cent and overall crime fell by 14 per cent. Both of these things reduced the cost of crime by £6.4 million, set against an investment of £600,000. That means £6.4 million of public money to move into pension plans. According to the Treasury, the cost of crime is £36 billion a year. So the case for preventive investment is absolutely compelling.
	The most pervasive of all crime drivers, and by Treasury estimates the third largest global commodity in value after oil and arms, is illegal drugs. I speak, too, as the parliamentary patron for ISAAC, a network of international drug treatment centres, clear that abstinence must follow rehabilitative treatment. I was gripped recently by a story in the 22 April issue of the Economist, headed "The Charm of Rehab" and telling the story of Proposition 36, which came into effect in July 2001 in the state of California. The Economist reported that, as California has proved, for every dollar spent offering treatment instead of incarceration for non-violent adult drug offenders, it saved $2.50. There was a total of $140 million saved in year one and $158 million in year two. Estimated total savings are of $900 million in five years, plus another $500 million saved by not having to build another prison.
	A wider impact, also noted by the Economist, was a 20 per cent fall in imprisonment—relating to an actual reduction of 16,000 prisoners—which, in UK terms, is a saving of £60 million. It seems obvious, in the wider sense of well-being required around the impact of pensions, that less crime, safer communities and more released tax for pensions investment are together an effective way not just to cut costs and deliver more security but to restore hope in our communities.
	Exactly a week ago, over the course of two hours on the Thursday morning, I was in the sunny city of Melbourne in Australia. I was visiting the Port Phillip prison, just to the west of it, which is run by the private operator GSL. That is a maximum-security prison for 700 offenders—male remand and sentenced prisoners—handling 24,000 prisoner movements a year. It includes specialist facilities for offenders with psychological and intellectual difficulties and a distinct youth unit. It was a model of order and civility: offenders were out for 12 hours a day, fully engaged in good working practices, delivering work, learning and new experiences. It was thus a model provider. There are four complementary prisons run by GSL in the UK. According to the prison governor, with whom I spent a good amount of time, the estimated recidivism rate—that is, the returns of offenders—is around 40 per cent at that prison, compared to UK rates of around 70 per cent.
	I also want to recommend to your Lordships' House restorative justice, which cuts reoffending by 30 per cent. If we are to liberate the money necessary to invest in effective pensions and secure people's economic well-being, we need also to secure their social and community well-being. Restorative justice allows the joy of forgiveness and forgiving others to bring back freedom and trust in our communities. Yet criminal justice, which currently takes up 10 per cent of all government expenditure, could become a way of solving problems. Rather than endlessly spending money on holding people in crime, it could prevent crime. In future I hope to speak more fully on opportunities to prevent crime and save resources and by doing so build people's sense of well-being in their communities and enable them to have secure pensions and to secure an investment in their whole person.

Lord Rosser: My Lords, I should like first to extend a warm welcome to the noble Lord, Lord Hastings of Scarisbrick, and to offer to him the congratulations of your Lordships' House on his thought-provoking, informative, eloquent and thoroughly enjoyable maiden speech.
	The noble Lord has had a distinguished and interesting career which already has been recognised by the award of the CBE. He has been, among other things, head of religious studies at a school in Uxbridge—very near to where I live—and a consultant to the Downing Street Policy Unit on urban policy. He has worked in television as an education correspondent and political correspondent and as a presenter. He has been the BBC's head of public affairs and then head of corporate social responsibility before recently joining KPMG International as its global head of corporate social responsibility. The noble Lord has also been a commissioner for the Commission for Racial Equality, a member of the Social Security Advisory Committee, and a member of the then Metropolitan Police Committee. He was also a founding director of Crime Concern.
	Inevitably, I have not been able to refer to all the many and varied interests of the noble Lord, Lord Hastings of Scarisbrick. What is clear, though, is that the noble Lord has a wide knowledge of life today, knows a considerable amount about the workings of government, and will be contributing with real authority and with practical experience to our debates and discussions on an extensive range of issues. Having heard the quality of his maiden speech, we look forward to hearing from the noble Lord, Lord Hastings of Scarisbrick, on what will, I trust, be numerous occasions in the future.
	I wish to thank, as other noble Lords have done, the noble Lord, Lord Turnbull, for initiating this debate. I wish to speak broadly in support of the Turner commission proposals. The view of the Turner commission was that the new pension settlement must rest on two elements. The first element, as has been said, is the new policy for earnings-related pensions based on compulsion on employers and a soft form of compulsion for employees, which includes an individual right to opt out. The second element is a reformed state pension system to reduce means-testing and complexity and address the long-standing gaps in provision for women and carers.
	A key recommendation from the Pensions Commission final report is the creation of a national pension savings scheme with a minimum default contribution of 4 per cent out of an employee's individual post-tax earnings above the primary threshold, 1 per cent paid for by tax relief and a 3 per cent compulsory employer contribution. Contributions to the NPSS would be collected by the PAYE system or a possible new pensions payment system. The Turner commission says that this method of collecting contributions would enable charges to be as low as 0.3 per cent, compared with the current stakeholder pension charges of 1.5 per cent.
	The minimum default rate of 8 per cent could hardly be described as high and one would hope to see it increased annually or through an agreed mechanism. However, the NPSS would introduce for the first time such a scheme with a default minimum contribution rate on all employers, and ought to be a proposal that would attract wide support.
	On state pensions, the Turner commission proposal that available resources should be directed to ensuring as generous and non-means-tested a flat-rate state pension as possible, indexing the basic state pension to average earnings growth over the long term, has cost implications that will need to be addressed. However, indexing the basic state pension to earnings is a welcome proposal. The commission itself argued that state spending on pensions needed to increase from around 6.2 per cent of GDP today to between 7.5 per cent and 8 per cent of GDP by 2040, but it stated that even without reform the cost of the current system was likely to increase to 7.5 per cent of GDP by 2040.
	The commission argues that the improvements to the basic state pension can be paid for in the medium term from the savings generated by the planned increase in women's pension age to 65 by 2020. However, the commission then said that sustaining the cost indexation after that in the light of the expected rapid increase in the number of pensioners will require a gradual increase in the state pension age with their preferred option being a state pension age of 67 by 2040 and 68 by 2050.
	Not surprisingly, not everyone has been enthusiastic about a rise in the state pension age. However, the surely inescapable logic must be that as life expectancy increases, and thus the number of years drawing the state pension increases, some upward adjustments will be needed in the state pension age if the cost is to be contained within manageable bounds. The debate has to be about the extent of the upward adjustments required and when they need to be made.
	There is also a point about ensuring equity on this issue since the evidence shows that life expectancy for the less well-off members of the community is lower than for the better-off. Hence a rise in the state pension age would have a more profound impact on the less well-off than the better-off. One suggestion has been that consideration should be given to the feasibility of relating any increase that may be deemed necessary in the state pension age to increases in life expectancy of the less well-off members of the community.
	The Government have given the financial services and pensions industries an opportunity to come up with an alternative to the proposal by the Turner commission for a new national pension savings scheme. There are powerful supporters of such alternatives. It is vital though that costs are kept as low as possible, which means sticking, as a maximum, with the 0.3 per cent suggested by the commission. The idea of the NPSS is surely to help the large numbers of people who are neither very low paid nor very high earners and who need a range of straightforward low-cost investments. That of course is a gap that stakeholder pensions were also designed to fill, but the industry argued that it could not make these work with charges of 1 per cent, and it is now allowed to charge 1.5 per cent for the first 10 years.
	Unfortunately, a difference in annual charges between 0.3 per cent and 1.5 per cent can make a significant difference in the size of the final pension. With the costs of marketing, collection and the need for a financial return, the handing over that would be involved of much of the nation's pensions savings to companies which are not accountable in any way to savers should raise serious questions over the pension company alternative to the NPSS on grounds of cost and governance. Nor am I convinced, following the mis-selling of pensions, that the pensions industry has the public support and confidence it sometimes appears to imagine.
	I very much hope that the Government will not allow themselves to be deflected from the Turner commission proposals and will consider very carefully and sympathetically the commission's model of a non-departmental public body with its own board which is clearly public and non-profit making. The attacks on the commission's proposals have already started. One accusation has been that what is proposed is a Stalinist nationalised system. Clearly, the national debate over Turner could in some quarters plumb new depths of vitriol and invective. I urge once again the Government to back the thrust if not literally every detail of the Turner commission proposals.

Lord MacGregor of Pulham Market: My Lords, I must begin, as I do in pensions debates, by declaring an interest as a non-executive director of a life and pensions company. I am grateful to the noble Lord, Lord Turnbull, for initiating this debate and for his excellent opening speech. I congratulate the noble Lord, Lord Hastings of Scarisbrick, on his profound and timely maiden contribution. I hope that this is the first of many pensions debates that we will have in this House in the coming year because of the pensions expertise in this House. Pensions are a hugely complex subject. Each aspect of it has its own complexities. In a short contribution I must be highly selective and even broad brush, only scratching the surface.
	I am glad to have this opportunity of congratulating the noble Lord, Lord Turner, on his reports. Taken as a whole, they are superb reports. I accept the analysis and I support most of the recommendations, particularly the well constructed return to the earnings-related state pension, the gradual phasing out of means-testing, and auto-enrolment. I think that the latter is particularly important because of the number of companies that still do not have pension provision for their employees, as the report very clearly points out, but perhaps even more because of the surveys that demonstrate that young people nowadays know that they must themselves provide for their own retirement but do absolutely nothing about it.
	I say in parenthesis that the report may have underestimated the impact of longevity, given recent experience. It has, therefore, perhaps been rather conservative in its proposals on raising the pension age. I am pleased to see that regular reviews of longevity should be one of the key issues for the noble Lord's proposed pensions advisory commission. Perhaps that will deal with that.
	The area that I particularly want to concentrate on today is the national pension savings scheme, as did the noble Lord, Lord Hunt. There is a very fair analysis of the pros and cons of the NPSS, as against the proposed alternatives, in the final report. On balance, however, I come to a different conclusion. I favour the Association of British Insurers' scheme, no doubt with some variances as it develops, for two fundamental reasons.
	First, the Government's ability to run massive, centralised computer schemes is, to say the least, unproven. Their record on a whole range of schemes is pretty abysmal. They do not run to time and have massive over-runs on cost. We heard many worries about that in the identity card debates. One variant in the report is to contract out the running of the system to different contractors, but that does not overcome one's fears. Surely it is far better and safer to build on the many pension providers who already run good systems and who are at the cutting edge of technology advance in serving customers. Indeed, providing top-quality service through technology is one of the highly commendable aspects of competition and choice today.
	Secondly, I have some concerns about the actual pension provision itself. The stakeholder pension scheme clearly has not worked. It had the wrong target anyway. If it was going to achieve the target group of people earning between £9,000 and, say, £18,000 to £20,000, and given the level of pension credit, then there was a very good argument for saying that this was government mis-selling and that people should not have taken it up on that basis. One serious aspect of the rapid decline in defined benefit schemes is that defined contribution schemes do not usually provide as good an alternative for the employee. The employer backed the defined benefit scheme; the employee takes the investment risk in defined contribution. More importantly, and one of the worrying features today, employers and employees are contributing much less as a proportion of their salary to defined contribution schemes. The risk of the NPSS is that employers and employees will regard the 8 per cent contribution as the norm, whereas it should be the base. The final report recognises that and puts emphasis on,
	"the communication of important messages which seek to counter the levelling down risk".
	I do not put much faith in that. Moreover, the final report stresses that the NPSS is not intended to be a replacement for good occupational provision. There is a danger that it will be seen as such. For both those reasons, I prefer the ABI scheme, because good pensions need to be sold.
	The commission, naturally and quite rightly, has been much concerned about costs. However, automatic enrolment will halve the marketing and commission costs that are involved in current schemes, bringing the overall costs much closer to the original 30 basis points that was being recommended, which I am fairly sure would be too low even for the NPSS scheme.
	I turn to my second point. The fascinating charts in figures 2 and 3 on page 13 of the final report show that there has been a decline in the percentage of the workforce in the private sector contributing to a non-state pension from about 55 per cent of the workforce in 1997 to 41 per cent in 2005. However, the increase in the public sector—in what was a rapidly expanding workforce—was from more than 70 per cent to about 85 per cent. It underlines the increasing disparity between the private and public sectors and I was pleased that the noble Lord, Lord Turnbull, spent some time in his speech on it.
	The Government calculated recently that the total liability of unfunded pensions—I stress unfunded pensions—in the public sector by March 2005 was £530 billion. Stephen Yeo, who has specialised in this subject at Watson Wyatt actuaries, calculates that figure at £690 billion. However, Stephen Yeo has also done a recalculation at March 2006. He now calculates the figure at £960 billion. Trying to put it on a comparable basis with the private sector as its liabilities are currently calculated, he put the figure at between £800 billion and £850 billion.
	I believe that the Government's attempts to deal with the situation so far, on which they have signally failed, by increasing pension ages for new employees, thereby saving £13 billion over 50 years, are totally inadequate. Stephen Yeo also calculates that the health service salary increases over the past year have in themselves added £7 billion to accrued liability and £14 billion on his basis of calculation. A saving of £13 billion over 50 years has therefore been overtaken in one year by salary increases in one part of the public sector.
	The Government, particularly through the Pensions Act 2004, are forcing the private sector to take decisions now to deal with currently computed liabilities decades ahead, with, in many cases, huge impacts on important corporate decisions that they are taking now: big investment decisions, corporate restructuring, redundancies, refinancing and so on. The Government airily say that there is no need to take such matters into account in the public sector because it is all spread over decades ahead. Worse, they continue to take decisions that in one year make the situation much worse for the future. Companies have to take often very painful and difficult decisions now. The Government are avoiding the difficult decisions on the basis that future taxpayers will simply have to pay more and more. That cannot continue. Above all, if fairness is to be one of the criteria in the post-Turner age, there cannot be one rule for unfunded public sector pensioners and another for private sector pensioners.
	There are many other pension issues which are not covered in the report that I hope we will be able to deal with before long. They include the way in which private sector pension liabilities are currently calculated—and I am glad to see that the Accounting Standards Board is looking at that. They also include the way that the pension fund regulator regime is working. A number of predictions that we made in this House are coming true, but there are unexpected consequences. Another issue is the rapid growth of new companies set up to take over closed life funds and now company pension schemes. I hope that we can return to those subjects. That is why I conclude as I began, by saying I hope that this debate will be the first of many in the coming year.

Baroness Greengross: My Lords, I add my congratulations to those given to the noble Lord, Lord Turnbull, for initiating this very important debate. I also congratulate the noble Lord, Lord Hastings, on his excellent maiden speech.
	I declare an interest as president of the Pensions Policy Institute and an honorary fellow of the Institute of Actuaries, with which I do a great deal of work. I start by welcoming very warmly the principles outlined by the noble Lord, Lord Turner, and his colleagues in the report and the general agreement in this country that our pensions system urgently needs reform. I also welcome the recognition that a higher basic state pension is infinitely preferable to the complex, costly and stigmatising reliance on means-testing. Why could we not just raise the basic state pension to the level it would be after pension credit? Reducing the number on pension credit would do much to give us a longer-term solution. I acknowledge that the pension credit scheme has done a lot to move people out of poverty, but it is a very short-term answer to the problems.
	I welcome the fact that the report acknowledges entitlement based on criteria other than pure monetary contributions, for example residence and therefore possible life contributions such as caring, which make it fairer to women who must be treated as individuals and not made reliant any longer on their husband's contribution record. Above all, I welcome the fact that it would allow part-time work to be combined with taking a partial pension. But problems still remain. In my view the recommendations are still too complex and potentially rather difficult to understand. The proposed incremental changes involve many different parameters, which add to those complications. We know that the value of pensions is still unpredictable. The state pension has little to offer poor people who start work earlier and have a shorter life expectancy. Calculating life expectancy is difficult due to much uncertainty, which adds to the difficulties. We also know that the proposed national pension savings scheme would be very difficult for low-income people because of the means-testing trap that they might face if they go down that road.
	We must always remember that longer and healthier life is one of the greatest achievements of the 20th century. It offers us the opportunity to change our total approach to income in later life. The traditional retirement age now seems completely arbitrary, as does the concept of retirement itself in many cases. Of course, the age at which people leave the workforce must increase, but the answer is probably not to set a higher fixed age, which may impact disproportionately on lower-income pensioners, but to create incentives through greater flexibility and personal choice, supported where possible by government retraining and other relevant programmes; in other words, incentives to stay in, go back to or enter the workforce much later in life than at present. Perhaps this is the occasion for very bold thinking introducing a single-tier basic state pension, which would avoid both the unpredictability and the disincentive effect of a complex second savings scheme. Any state pension should be large enough to get the proportion of people eligible for pension credit down to, say, 10 per cent. It is now at 50 per cent, but could go down to 45 per cent, according to the PPI model, which calculates a greater number of people on means-tested benefits than the Turner report suggests.
	We should also consider whether being even more bold could be an answer, given the ease of electronic money transfer, and whether we should simplify pension and benefit entitlements for this group, making them payable by one department. That would reduce much of the complexity. A political decision would emerge on where to start eligibility for benefits. Certainly, that would be the quickest way to eliminate stigma and that, in itself, would be worthwhile.
	The Turner commission paves the way forward in a very positive way. I hope that the Government will build on its findings and accept its value for a situation which very much needs our attention.

Lord Eatwell: My Lords, the Turner report is a credit to its authors. They have not only produced some important practical proposals but also provided a framework of analysis within which a truly constructive debate can be held. Your Lordships' response once the noble Lord, Lord Turnbull, had secured the debate demonstrates that proposition. Sadly, however, debate on the proposals in the report has tended to obscure the analysis.
	I want to spend a few moments discussing the excellent economic foundations of the Turner proposals in order to develop some proposals of my own within the same framework. As noble Lords have already heard, the change in the ratio between the retired and the working population poses a deceptively simple problem: how is the working population, who produce the flow of goods and services, to be persuaded not to consume everything that they produce, but instead to transfer an ever-increasing share to sustain the standard of living of the growing numbers of retired?
	Assuming that that is not done by raiding other uses of national product, such as cutting expenditure on defence or health, or cutting private sector investment, it can be done in only two ways: either by the working population deciding not to consume—that is, to save—or by taxing the working population; forcing them, if you like, to give up a proportion of what they have produced.
	We should notice, first, that what matters is contemporaneous savings—transferring current production from workers to the retired. The goods and services that pensioners need typically cannot be saved up. You cannot save today's medical services for use in 10 years' time. You cannot efficiently save today's food production to eat in 10 years' time and you certainly cannot save today's bus or train journey to use in 10 years' time. With the notable and, indeed, important exception of housing space, it is a fallacy to pretend that society as a whole can save up for future pensions—it cannot.
	Secondly, given the amount that the working population wants to save, any need to release further goods and services for the pensioners will require higher taxation. There is no other way. That is obvious if pensions are paid by the state, but in the UK most pensions are secured by the accumulation of a stock of financial assets that we have saved up over our lifetimes. When the time comes to buy the goods and services that we need in retirement, those financial assets must be turned into cash. But if the working population is not saving more, there is no one to buy the assets. The only possibility, indeed, the only hope, is for the Government to borrow less, funding their expenditures out of increased taxation. So for any given level of pensions and rate of savings, the increase in the dependency ratio will require exactly the same increase in taxation. The Treasury cannot escape the "expense" of pensions—certainly not by constraining state pensions in favour of private savings schemes. In the end the tax implications of the two approaches are identical. So the key issue in the debate over different pension proposals is not how expensive they are but how different pension arrangements impose risks on different parts of the community.
	With the experience of the past few years, when some have seen their pensions wiped out by corporate collapse, and when pension funds have reneged on their promises, it is surely now accepted that the issue of risk, and by whom it is borne, should be paramount in the evaluation of any set of pension proposals.
	So what are the risks to which pensioners are exposed? First, there is demographic risk—the risk that the ratio of pensioners to employed persons will rise because of yet greater unforeseen falls in the birth rate and increases in longevity. The sensible way to prevent the ratio rising is to increase the pension age, as the Turner report says. However, we all know that doing so is politically delicate. The Government, indeed, have discovered that to their cost over the past year or so. I wish to propose that instead of a fixed retirement age there should be a flexible decade of retirement, say from 60 to 70 or 63 to 73, within which people can choose their retirement age and have appropriate actuarial adjustment of their pensions. Some in very heavy trades or very boring jobs may wish to retire as soon as possible, but studies suggest that the median age of retirement would be about two-thirds through the designated decade. So the government would secure the needed increase in the pensions age to 67 or even 70, without incurring the opprobrium of an imposed increase—people could choose.
	The second major risk is GDP risk—the risk that a relatively smaller working population will produce a flow of goods and services that does not grow as rapidly as expected. Then there are problems of energy costs to be faced in the future as well. This is a risk that society as a whole must bear—pensioners included. So all pensions promises, other than the most basic, should contain a conditional element: allowing for the uncertainty of the overall economic future.
	The third major risk is distribution risk—the risk that the distribution of income will change to the detriment of the pensioners. In a state pension system the Government may renege on their promises, as the UK Government did when the link between pensions and earnings was broken. However, it is funded schemes that are exposed to the greatest risk—the risk that the market value of accumulated assets will fall short of what is expected. Moreover, assets are typically accumulated not by the individual but by institutions—firms, in the case of many occupational pension funds, or collective savings institutions. As the noble Lord, Lord Turnbull, has indicated, these institutions may be less secure, so increasing the risk to which the pensioner is exposed.
	It used to be argued that the worked-based, defined benefit schemes were the glory of the British pensions system. I think just about everyone has realised that they were an economic folly. They imposed risks where, in the face of demographic changes, they cannot be borne. They continue to impose huge burdens on British companies and huge uncertainties on pensioners. The shift to the defined contribution schemes places the risks directly on the pensioner. The firms escape, but the pensioner is now exposed to the vagaries of the financial markets.
	How do the commission's proposals stack up in the light of these risks? The proposal for an enhanced, properly indexed state system is clearly correct—indeed essential. I would go further, and restore a comprehensive second earnings related state pension. However, this second pension should not have a fixed pensions promise; rather, the promise should be linked to economic growth, ensuring that the state is not committed to excessive transfers if overall out-turns are lower than expected.
	While preferring a state second pension, I concede that the proposed national pension savings scheme scores well as a device for spreading GDP risk over the population as a whole. My worries about this scheme are first, that it perpetuates the myth of saving up, and secondly that it exposes pensioners to risks inherent in the volatility of financial markets. The scheme must incorporate a smoothing device to ensure that particular pensioners do not suffer because of short-term market instabilities.
	Finally, the Turner commission argues that the foundation of any satisfactory pensions policy must be national consensus. That consensus can only be formed by broad agreement on the analytical framework of the pensions debate and a recognition of the risks inherent in pensions policies: what those risks are, who can best bear them and how they can be fairly distributed. These are the key questions and it is to the credit of the noble Lord, Lord Turner, and his colleagues that we are now facing up to them.

Lord Howarth of Newport: My Lords, I would like to make one essential point; that is, about the need for realism in relation to pensions—realism has been all too extensively lacking. To my mind, the supreme virtue of the reports by the Pensions Commission, chaired by the noble Lord, Lord Turner of Ecchinswell, is that their diagnosis and prescription help us to face reality.
	Far too many people in this country suppose that they can work for 30 years, start to save late and little and look forward to 30 years of comfortable retirement. Huge and rising numbers of private sector employees are not investing in a pension scheme at all. Meanwhile, as a society, we mortgage ourselves orgiastically, and unsecured consumer borrowing rises by double digit percentages year on year. There is wilful ignorance. According to a Prudential/Daily Telegraph survey, 57 per cent of people do not know the extent of their debt; 10 per cent of young adults think an ISA is an energy drink; 17 per cent think it is an iPod accessory. They have not been helped by the fact that financial education, information and advice provided by employers in the workplace, far from attracting tax relief, is treated as a taxable benefit for employees. Nor have they been helped by the frivolous suggestion made by the Parliamentary Ombudsman Ann Abraham, that the Government would underwrite the whole of private sector provision.
	The extreme complexity of our national system of pensions, the scandals that have occurred, the perception among people that they have been short changed, the disillusion, even, over the Financial Assistance Scheme, all mean that it is going to be difficult to undo prevailing cynicism and to create trust and responsible attitudes to swing the culture away from a culture of indebtedness back to a culture of saving.
	Employers, as they increasingly aped the public sector in the provision of defined benefit pensions, perhaps overlooked the fact that, unlike the Government, they are not in a position to levy money by taxation or to print it. They made a thousand billions' worth of defined benefit promises. The promises became ever more extravagant: indexation, survivors' pensions, and then they found that they had a shortfall in funds of an enormous magnitude. Pensions holidays were being taken not long before catastrophe loomed. The position was pretty clear by 2004 when the CBI found that 63 per cent of companies had found that their pension deficit had had a significant or severe effect on their profits and 16 per cent had been forced to cut their dividends. Since then, employers have been frantically diluting and closing their pension schemes although, in all too many cases, directors have been sparing themselves the pain of the hit.
	Nor have the professionals invariably been very clever. The actuarial profession seems to have failed to anticipate demographic change and longevity and the course of interest rates in a low inflation environment. Perhaps they were wrong-footed by the unexpected arrival of good government. The Accounting Standards Board produced FRS17 which, after five years of debate, we have implemented, insisting that assets should be measured at market value and that there should be a full recognition of deficits on balance sheets, thus generating, it seems to me, pessimism and damage on the basis of flimsy and erratic projections.
	Now we have the new regulator who has proposed that deficits should be eradicated within 10 years. PricewaterhouseCoopers, carrying out research on behalf of the regulator, found that 10 to 15 per cent of companies would need between 25 and 100 per cent of their free cash flow to be applied to reducing their deficits. Alternatively, there would have to be unheard of investment returns or wholesale dilution of rights, even where trust deeds permit it. So, the regulator has produced liability-driven investment strategies. There has been a lemming-like rush into long-dated indexed gilts. Final salary funds—worth some £800 billion—have been fighting each other in the market place to acquire an asset class worth only £41 billion, even at an inflated value.
	As the funds have bid up bond prices, yields have been depressed and deficits have widened. They have widened by leaps and bounds. In January, the actuarial profession's Pensions Board found that the black hole in the pension funds of the FTSE 100 companies was, after all, not £75 billion but £150 billion. This is crazy. It is also very serious. The damage that is being done affects not only people who are in defined benefit schemes but it also drives down the value of the annuities that people in defined contribution schemes are going to need.
	We are seeing a wholesale misallocation of capital. While the goal of matching liabilities remains out of reach, funds have been net sellers of equities, holding back the equity markets to the detriment not only of the pension funds themselves but of businesses wishing to raise capital and to invest. We have seen a spate of foreign takeovers which in itself may not necessarily be a bad thing, but which is highly likely to be accompanied by more closures of plants. All of this compounds the effect of FRS17, as it requires the transfer of profits and reserves into the funds, weakening company balance sheets, depressing investment in the businesses upon which we depend to generate jobs in the future and of course the wealth to pay pensions. What sort of regulation is that?
	Governments have all too often averted their gaze from reality. Honourable, honest, clever politicians and officials have in too many cases got things lamentably wrong. For a long time there was complacency. We had a great deal of private sector pension provision. Our position on unfunded public sector liabilities was much more favourable than that of countries on the continent of Europe. The state pension was politically popular. So presumably all was more or less well.
	Governments ignored the link between the situation of pensions and our failure to improve productivity in our economy as we needed to do. That is a complex question, but if business investment fell from 15 per cent to 9 per cent of GDP while top-up contributions by businesses to their pension funds rose from £11 billion in 2001 to £26 billion in 2004, there is a link. The Government have been reluctant to acknowledge—whatever the virtues initially of pension credit in reducing poverty among elderly people—that means-tested benefits rising high up the income scale do damage saving. There has been overkill in the powers of the new regulator. As I understand it, he has power to vet and veto takeovers, mergers, restructuring, dividend payments, flotations and refinancings. That is strange.
	I want to say something about tax relief, which has been an engine of inequality. In 2004–05, as the commission tells us, it was worth £12.3 billion or a net cost of 1 per cent of GDP. It is,
	"poorly focused and poorly understood",
	in the words of the commission. Half of tax relief goes to the higher rate tax payer who is well off and does not need incentivising to save for a pension. Under the A-day reforms, the lifetime limit is as high as £1.6 million and full tax relief at the highest marginal rate is available on contributions up to £215,000 per annum. Of course, as the commission explains, there is a difficult problem about altering tax relief in a defined benefit environment, but we should envisage a shift to targeted tax relief to encourage and benefit low earners and savers.
	After so much self-deception, muddle and observation, the Pensions Commission offers us a realistic assessment of demography, of the state of the pensions industry and of the options and the trade-off that we must face. It guides us to realistic policies. I hope very much that the Government White Paper will embrace essentially the proposals of the Pensions Commission in their entirety.

Lord Skelmersdale: My Lords, one of the many faults that I suffer from is an eye for detail so, far from following most of your Lordships in looking at the generality behind the excellent report of the Pensions Commission chaired by the noble Lord, Lord Turner, I will ask your Lordships to suffer with me. In thanking the noble Lord, Lord Turnbull, for introducing this much needed debate, I readily accept the Government's request for consensus on this important issue. A meaningful debate, however, resulting in consensus, cannot be achieved without a clear baseline, as the noble Lord, Lord Eatwell, has just said. In essence, would the commission's proposal for state pensions, accepted across the House this afternoon—paid at a higher level and upraised in line with earnings—be affordable, as the report assumes? Are the savings from equalising the retirement ages of men and women—some £10.1 billion by 2020—to be thrown into the pot? Does that figure include both the extra NICs that will come in as well as payments not going out of the fund?
	A sub-subject of state pensions that I would like to touch on is the future of the state second pension. The report gives two options on that. One is to introduce a unified state pension, paying more than currently, and rising over time with earnings. That would mean ceasing future S2P accruals. The other involves keeping S2P as well as the basic state pension, but halting the spread of means testing, by linking the basic pension to earnings rather than inflation. The question that therefore arises is whether the state second pension should wither on the vine. There is, of course logic to this, and that is the proposed national pension savings scheme. The proposal for auto-enrolment, with the opportunity for the employee to opt out, is eminently reasonable, and I expect that very few will opt out. However, if they do not opt out, the employer's contribution will be compulsory. That has posed problems for some employers and, as far as I can judge, all the unions, because of the rather static way in which they view wage rises and the bargaining to achieve them.
	The time has come for both sides to look at the total employment package. From the employer's point of view, the NPSS element could be achieved very simply, in my view, if both sides recognise that. If the increase in the take-home pay part of the package was reduced by 3 per cent in one year, the employees would no doubt scream blue murder, especially in these days of low inflation. It would essentially mean no increase in wages for a year, after which the pain would be over. However, the Government should consider phasing in the requirement over, say, three to six years. That would significantly reduce the worries of small, or not very profitable, businesses, and mitigate—if not eliminate—the squeaks of employees and their unions, who should appreciate that the pensions element is really deferred wages and will be returned to them many times over after they retire.
	There are other points that need to be considered regarding the NPSS. There are to be individual accounts, invested in funds chosen by individuals, backed up by a default fund for those employees who do not choose to make what the report calls "an active selection". That is fine as far as it goes, but what happens when a fund is not doing very well? How is that to be judged? Who by? Is yet another quango, as the report suggests, a viable option given the bad reputation that quangos often have, especially as more often than not the Government choose their supporters to be on them? Would it not be far better for the private sector to operate the scheme on behalf of the Government? It has the experience not only of managing funds, but of changing fund managers should it be necessary, and of comparing similar funds run by competing firms. There may be a small increase in costs, but I do not see much difference between the commission's 0.3 per cent and the NAPF's 0.4 per cent. However, the ABI's 0.7 per cent seems a long way out of kilter.
	Another suggestion in the report, as I read it, is that there should be no opportunity to switch between funds. Surely to goodness we all recognise that, coming close to retirement, people would want to switch, and if they took advice would do so. Yes, that would come at a cost, but it could come out of the personal fund, or be payable as a lump sum at the time of switching. We should also consider the position of those who make a positive decision to opt out. They may find the whole business of pensions too complicated and want nothing to do with them, perhaps relying on their own savings to see them through retirement. Others will have other pension arrangements which they see as a better bet, perhaps a self invested personal pension, where the rules have recently changed.
	Indeed, the recent activities by the Chancellor in this respect have helped, or perhaps hindered, some of the recommendations in this respect in the Turner report. Two things seem unfair to me. First, under a SIPP, you are now allowed to invest an amount equal to your salary up to quite a large amount. Why should you not have that opportunity under the NPSS? Secondly, with a SIPP you no longer have to take an annuity at 75, which my party has been inveighing against for years. The same advantage does not accrue to the NPSS, although admittedly many people will want, if not need, an annuity. Should they not be given a choice? There is no reason either why an employer should not put 3 per cent of salary into the employee's SIPP—a suggestion I have not seen floated anywhere. That too should be considered, if only to be rejected.
	I was going to go on to talk about a subject very dear to the heart of the noble Baroness, Lady Hollis—women's pensions—but that would take too long for the two minutes that I have left. Suffice it to say that these are some of the points that I expect to be covered in the forthcoming White Paper, and I will be very disappointed if they are not.

Baroness Howe of Idlicote: My Lords, I, too, thank my noble friend Lord Turnbull for securing the debate and my noble friend Lord Turner for his quite excellent report. I also congratulate my noble friend Lord Hastings on a memorable maiden speech, which will remain with many noble Lords for some time. I also thank the Government for ultimately securing such a candid presentation of the difficult truths that underlie this whole subject. All too often the difficult issues get ducked. Happily, since none of us here is in the business of courting votes or popularity, your Lordships' House is an ideal place for tackling such questions.
	Happily too, as Professor Nicholas Barr pointed out in an excellent article in January's Prospect, not all difficult questions on this issue need to be presented negatively. As already mentioned, two key achievements of our time are better health and much longer life expectancy. As a result we are able—not obliged—to look forward to a longer working life, and so to a later retirement age. My noble friend Lord Turner suggests going up to 66 years by 2030, and to 67 by 2050. These are certainly not huge changes. The further we are able to move in that direction, the more we shall be able to offset any increase in the contributions required to finance a decent basic pension.
	By advancing the retirement age, we should also be advancing the frontier beyond which the ageing will be able to look for and expect to find jobs. Flexible working to enable women and carers to seek employment is rightly being encouraged in the Work and Families Bill. A similarly flexible approach in this field will encourage and enable people to retire in stages. That will be good for the economy as a whole as well as good for them. This is also a good reason for looking forward to the implementation in October of the EU directive which makes ageism unlawful.
	What are the central features of my noble friend's approach, the national pension savings scheme? I am certainly with him on the basics. The basic pension should, for all the reasons we have already heard, cease to be means tested. The most important feature must be the inclusion of all carers and all non-lifetime employees. For historical reasons, the majority of both categories are women. No fewer than two-thirds of the poorest pensioners today are women. If anybody has any doubts about this, I recommend they read the excellent—and only one page long—article in the 27 March issue of House by the noble Baroness, Lady Hollis of Heigham, whom we are all looking forward to hearing from later. Carers play an invaluable role, and the cost to the state if they ceased to care would be incalculable, hence again the importance of the Work and Families Bill. The majority of parents, especially women but other carers too, can begin to combine both vital roles and contribute more to the eventual cost of their pensions.
	It is also particularly important that other workers should play their part in supporting them. Those in work who have no children can make their extra contribution by accepting and supporting universal flexibility in working practices. The sadly shrinking number of children, among those who have children, will then be contributing to the pension of those who remain childless, and vice versa. My noble friend has rightly stressed that the time has come, in this once-in-a-lifetime opportunity for rearrangement of pensions, to redress the unequal treatment of women, carers and disabled people, as well as the poorest in society.
	I hope the Government will consider one other issue: it is over 30 years since the UK took the vitally important step of equalising opportunities for women. Yet the Equal Pay Act 1970 and Sex Discrimination Act 1975 specifically excluded pensions from their scope. I shall always remember the torrent of complaints about this that we received during my time at the EOC. Unsurprisingly, men complained bitterly that they had to work five years longer than women, and women that they were not allowed to work those extra five years so that they could earn a higher retirement pension. That remained the position until a subsequent legal case classed pensions as pay.
	The planned increase in the pension age for women, to equal the male age of 65 by 2020, is under way. With the hugely increased percentage of women in the workplace, this clearly makes sense. I hope we can finally put the principle of equal opportunities into practice as far as retirement annuities are concerned. The law currently requires a percentage of any private pension scheme to be taken as an annuity. Yet a woman with parallel entitlement to a male employee in every respect other than sex receives a smaller sum, on the narrow basis that women live longer than men. Even that tiny expectancy gap is narrowing. It is finally time for this basic discrimination to be put to rest.
	Taxation will clearly play a large part in the financing of the proposed pensions structure. My noble friend Lord Turner makes the point compactly when he says,
	"a greater part of our taxes will have to be spent on pensions".
	The implication is that no tax increase will be needed, and that the problem can be managed simply by reshuffling the tax burden. If the pension share is increased then some other service will have a smaller share. The one service that should not—indeed, cannot—be allowed to suffer for that must be social care. The excellent Wanless report, Securing good care for older people, makes it clear that social care demands will rightly be a growing priority.
	Will taxes then have to go up? The proposed automatic enrolment into the scheme, with the option to opt out, will help make this less inevitable. Yet today's young earners are not saving sufficiently for retirement. Which?, among others, supports compulsory pensions savings. I hesitate to accept that, but when it comes to choosing between a diverse or an integrated system for the provision of the basic pension, it is easier to accept the rest of the Which? approach. A single, low-cost NPSS with an independent board, a firm duty to look after the interest of scheme members, and annual management charges set and maintained at 3 per cent would be crucial.
	Even with arrangements like these put in place, it will be important to retain and expand contributions from a diversity of other independent sources. From the earliest days of the 1942 Beveridge report, the case was made for continuing and growing private top-up pension provision. That has been encouraged by tax relief right up to this day. There should certainly be no discouragement of private pensions; quite the opposite. Here again—I am glad to close on this note—my noble friend Lord Turner is right with his call for "higher private pension saving". Pensions certainly need a good strong pair of public sector braces. If they can get it, they are well advised to have an ample private sector belt as well.

Lord Lea of Crondall: My Lords, I am not sure whether the characters in Waiting for Godot were pensioners. They were probably part of the flexible retirement decade. As I recall, the dialogue went:
	"Nothing to be done . . . Nothing to be done . . . Nothing to be done".
	Yet you could tell that underlying all this we were being asked the question: what if something had to be done? We are not in some debate about existentialism; we are looking at the facts on the ground. The dependency ratio is going down to 2:1 and something has to be done.
	The noble Lord, Lord Turner, has come to the rescue. He has an extraordinary range of credentials for dealing with this, and he has built up, through the intellectual quality of the report with his two colleagues, a remarkable consensus. This is against a background where, as has been said on many occasions in different forms, people think that pensions are part of their birthright but do not want to pay for them. There is an educational job to be done. Putting my trade union hat on for a minute, I would say that the trade unions have done an educational job.
	I congratulate the noble Lord, Lord Turnbull, on his excellent opening speech and on initiating an excellently timed debate. I welcome the fact that he is nudging his former colleagues in the Treasury in the direction of an adult debate about all the factors that are swirling around, such as the relationship between the state and the private sector. He is rather sceptical of the argument used by trade unions: people thought that they had a contract of employment, or equivalent, which would deliver something. Perhaps I may remind the noble Lord that for many years the first thing that was always said in saloon bars about trade unions, was, "Why do they not think they ought to keep to their contracts?" Of course, that applies both ways. The noble Lord is shaking his head. No doubt I can have a discussion with him, with or without a drink, another time.
	But there has been a great shockwave right through the trade union movement, as I think my noble friend Baroness Dean of Thornton-le-Fylde implied. The issue shot to the top of the trade union agenda two or three years ago, where it has stayed. People look to the arrangements that they have made with their employer or the state as the bedrock of their lives. As another noble Lord hinted, whereas it is true that money is not the total guarantee of happiness, it is obvious that the converse does not apply.
	I have mentioned the consensus that has emerged and it is remarkable how much has been achieved. I normally disagree with Martin Wolf in the Financial Times on 10 points out of 10 every morning over breakfast. A couple of weeks ago, in an article that I am sure the noble Lord, Lord Turner, has read, he went right through the race card and ticked off all the points, starting with the modest,
	"increased government expenditure of about 1.5 per cent of gross domestic product by 2050 relative to today's level but of no more than 0.5 per cent relative to projections under existing policies".
	He implicitly commended the new national pension savings scheme, which would be,
	"based on automatic enrolment, with opt-outs, a minimum savings level of 4 per cent of relevant earnings, compulsory employer contributions of 3 per cent (contingent on the decision of the employee to remain in the scheme) and 1 per cent in tax relief".
	The CBI and others argue about the onerous matching burden on small and medium businesses. Yes, it will be a change. But we are not just waiting for Godot; a moment will arrive when, from that morning on, people will have to put in some money from their earnings, or from the employer. Some very interesting figures produced by the Engineering Employers Federation do not look too horrendous, but they include resources transferred into the scheme, and there is no way around that.
	On whether the ABI's approach is better, Wolf makes the point that to some extent it is "talking their book". But are its points valid? There is no doubt on prima facie evidence that there would be some benefit of the default scheme being administered in the way described by Adair Turner on the basis that it would be a cheaper way to go. Then there is a somewhat spurious argument when people say, "Can it cope with workers who change jobs frequently? Can it cope with disorganised, short-lived employers?" Certainly, that is the trade union feedback. The fact is that people do not get out of bed in the morning and say, "What do I want? I want choice". They do not give two monkeys about whether they have choice or not. They want something that will give them support and a guarantee, which is why we are in a position where 85 per cent of the population have no choices to make. They cannot make a choice. In any case, most of the other 15 per cent of the population would be delighted not to have to make those choices, given some of the appalling histories of mis-selling and so on.
	I very much agree that the tax relief regime should be looked at. People at the very top of the tree seem to have been able to make contracts which are much more beneficial than even contracts made for senior civil servants. One public/private sector comparison that could be made is the enormous and growing ratio of top salaries and pensions in the private sector versus the public sector. That is the other side of the coin that the noble Lord, Lord Turnbull, has mentioned.

Baroness Hollis of Heigham: My Lords, we are all grateful to the noble Lord, Lord Turnbull, for making this debate possible and to the noble Lord, Lord Turner, for making this debate essential. I declare an interest as a board member of The Pensions Advisory Service and of the special board of the Higham Group. We have heard about a range of topics today, but I want to focus on the pressure of longevity and on whom it will fall.
	In the 1940s, a man at birth could expect to live to be 65 years old. Therefore, a pension was an insurance against the risk of old age, rather than a means of saving for its certainty. In the 1980s, men aged 65 could expect to live a further 13 years. The noble Lord, Lord Turner, tells us that by 2050 that figure will nearly double to 23 years. Already, there are more people aged over 80 than are aged under five in our society. By 2050, there will be three times as many men and twice as many women over 80. The average life expectancy of a woman could be 90.
	The good news is obvious: we live longer. The bad news, on which I want to concentrate, is dependency in its fuller sense. The Wanless report doubts that that increased longevity will be accompanied by either an absolute or a relative compression of morbidity. It goes on to say that, between 2002 and 2022, the population aged over 65 will grow by about half and the number of disabled people will increase by about two-thirds. The number of informal care hours needed will also increase by around 50 per cent, to be drawn from a working-age population much the same size as it is today.
	The good news is that men's life expectancy is improving faster than that of women, even between the two Turner reports. So there should be fewer single elderly people. Couples, of course, support each other, financially and in other ways. The bad news is that by 2030 nearly half of women aged between 45 and 64—not the young ones—will not be married. Therefore, whether they will be in, and stay in, long-term partnerships for better, for worse, in sickness and in health, is not clear. The really bad news is that the rate of increase in longevity is twice as fast for social class 1 as for social class 5. Inequalities in health by gender are narrowing, whereas inequalities in health by social class, relatively, are widening.
	Now, map that on to Wanless, who said that the opportunity costs of informal care could be,
	"especially significant for filial carers who might otherwise be at work, often at a critical time with regard to maximising their own earning and pension situation".
	Those filial carers are mostly women in their 40s and 50s. As their childcare ceases, their elder care will begin—a burden of responsibility no doubt gracefully and generously embraced. If her caring fits a nice, steady, male model of waged work of 35 hours per week, she may receive carers allowance and therefore NI, although only 400,000 out of 6 million carers do. But we know from experience that illness is seldom tidy and predictable. It fluctuates and goes into remission, or becomes more onerous. The carer may be able to manage only a couple of flexible, low-hour, part-time, low-paid jobs, without NI around, as the noble Baroness, Lady Howe, said.
	Even if the hurdle were reduced to 20 hours per week, we would still need to audit the disability of the person cared for to award the carer NI. Social services think that 15 hours per week is enough; you provide 25 hours, but of course you have travel time. The caring must be for one person, but she keeps two people afloat, each with lesser care needs. How can we track that for an NI stamp? We cannot and we will not.
	A woman in her 40s can find herself with teenage children, retired parents and a grandparent in her 90s: four generations, three of them pivoting potentially around her health, her work and her care. Yet she herself will at the same time be living longer and have a 50:50 chance of her marriage ending in divorce, which would mean that she could lose the spouse's pension but be unable to build a pension in her own right because of her care. She can choose her own financial well-being or support theirs. She probably cannot do both.
	We urge women to work and build their pensions for their own old age, but we are then as a society grateful and relieved when they do not do as we ask them to. Where women insist instead on caring for the generations ahead and behind them, we—society—punish them, with the contributory principle, for doing what is right. Every change in women's private lives—having children, getting divorced, being a lone parent, becoming a carer—impacts on their working lives, so unlike most men women at 29 cannot possibly predict the shape of their lives at 49. Therefore, if women at 29 start a pension, they do not know whether in the years to come they will be able to build enough NI contributions to be a single penny better off at retirement, to say nothing of the means-testing to which the noble Baroness, Lady Greengross, referred.
	Why then should a woman save? Indeed, if someone were to sell her a pension, that may well count as mis-selling. Those who face the greatest risk, uncertainty and poverty in their lives are also those who are least equipped to deal with it. A labour market-based contributory system for the basic state pension with its rules, credits, contributions and hurdles designed by men in full-time work for other men in full-time work cannot work for women. Women need a universal state pension as of right, which is why the proposals of the noble Lord, Lord Turner, for universal accruals and a full pension for the over-75s is the least we can do. Let us hope that the Government will not cherry-pick, as my noble friend Lady Dean said, and introduce the Turner proposals for men while rejecting them for women, who are the longest-lived of pensioners, the majority of pensioners and the poorest of pensioners. If there is such cherry-picking, women will be left, as now, exploited and excluded.

Lord Turner of Ecchinswell: My Lords, it will probably not surprise your Lordships to hear that like several other speakers I broadly support the Pensions Commission's recommendations. Indeed I am one of those people who wholeheartedly support everything the commission said. There would probably be little value in me detailing the grounds for my agreement with myself and with my fellow commissioners.
	Rather, I would like to make three general points about the nature of the commission's proposals and the opportunity now before us. The first is that the recommendations form an integrated package and it is difficult to pick and choose without undermining the coherence of the whole. The commission proposed two key elements of policy: reform of the state pension system to make it simpler, fairer to people with interrupted careers and caring responsibilities—which primarily means women—less means tested, which implies more generous on average, but with that package made affordable and fair between the generations by slowly raising the state pension age. That is the first element of the package.
	Alongside that, there are reforms to the private pension system to create a new national pensions saving scheme, the NPSS, into which employees who are not already in good employer schemes would be automatically enrolled but with the right to opt out and with a small matching employer contribution when the employee stays enrolled. Those two elements fit together. The state system reforms aim to create a sound platform on which people can build, keeping people out of poverty on a largely non-means tested basis, but it is a platform only. The vast majority of people, if they are to feel adequately provided for in retirement, will need extensive private provision on top, but they will not achieve that in an entirely voluntary system. Hence the NPSS is essential in addition to the state pension platform.
	The NPSS in turn will not work effectively without significant change to state pension policy. Continued growth of means testing would undermine its success. The package is therefore an integrated one and we need to go forward with both elements together. I want to pick up here a point made by the noble Lord, Lord Hunt, and echoed to a degree by the noble Lord, Lord MacGregor, which related to the importance of building on good existing employer pension provision, with which I entirely agree, and the dangers of levelling down.
	We would entirely accept on the commission that we do not know for certain what will be the effect of automatic enrolment, although we believe that there is evidence to suggest that it will have a large effect. We also know that there is at least some danger of levelling down, but we have to accept that our debate about that has to be within the context of understanding that the existing system is not working and presently we have a danger of levelling down to zero. There have always been segments of the British workforce which, even when we thought our pension system was excellent, were outside it; and that segment is increasing. Ten years ago, about 42 per cent of private sector employees were in no pension scheme other than that which the state required, and that figure has gone up to 56 per cent today. That is levelling down to zero. The key priority is to guard against that, which is what the NPSS aims to achieve. Alongside that we have to make sure that as many employers as possible are providing more than the NPSS as well.
	The second general point I want to make is on the importance of achieving cross-party consensus and continuity of policy. If people are to make sensible pension saving decisions either personally or through their choice of which employer to go to, they need to understand far in advance what the state will do for them. They need certainty about what they are going to get from the state and what they are not going to get from the state. They need to be confident far in advance that private pension saving on top will give them a good return. But at present that understanding and confidence are almost wholly lacking. The cumulative effect of multiple past policy changes, each of which appeared to make sense at the time, has left us with a pension system that most people neither understand nor trust. That was clear to the Pension Commission in the focus groups of individuals that we conducted. We need a new settlement that is simpler and more understandable.
	I completely understand the concerns expressed by the noble Baroness, Lady Greengross, that the commission's proposals still for many years leave a significant amount of complexity. There is a straightforward trade off between the pace at which we can make it simpler and the public expenditure cost. There are ways of making it simpler faster, but they are more expensive still. If there are Treasury concerns about the affordability of what we proposed, anything that is simpler and faster would be more expensive. I am sympathetic to those concerns, but there is a trade off to be made.
	In addition to having a new settlement that is more understandable, we need a new settlement that lasts. That is difficult to ensure since no government can bind their successors and governments always wish to have maximum flexibility on public expenditure year by year. But other countries show that continuity in pensions policy is not impossible. The USA has in Social Security a trusted and widely understood system which has been reasonably constant since it was created 70 years ago and which has been gradually reformed, usually on the basis of bipartisan agreement, with changes declared decades in advance. Sweden has over the past 13 years debated, agreed and then implemented, with cross-party support, a fundamental redesign of its state pension system to make it sustainable for the long term. In pensions policy, we cannot and must not accept that there is something unique about our British political culture that makes cross-party consensus unattainable. We need to attain it, and today's debate has an important role in helping to forge it.
	My third point is that consensus must be based on a realistic understanding of consequences and costs. The Pension Commission has been deliberately clear that over the next 45 years our proposals would entail increasing public expenditure on state pensions versus the present level by about 1.5 per cent of national income, which would increase it from today's 6.2 per cent to about 7.7 per cent, the mid-point of our suggested range, in 2050. As the noble Lord, Lord Turnbull, pointed out, 1 per cent of that increase is likely to occur even under existing policies, so the increase versus the no-policy-change scenario is about 0.5 per cent of national income. In the face of the demographic challenge that we face, even an increase of 1.5 per cent from the current level would still leave Britain with one of the lowest levels of public expenditures on state pensions in the OECD and with one of the smallest increases between now and 2050. Over the years up to 2020, the first steps of reform require only a minimal increase in public expenditure versus the current level—about 0.1 per cent of GDP, a tenth of a per cent of national income—because the already-planned increase in the state pension age for women will, under existing policies, produce a significant fall in that percentage. Like the noble Lord, Lord Turnbull, I believe that the increase in state pension expenditure that the commission has proposed is clearly affordable, but beyond 2020 it is significant and therefore merits serious debate.
	The three pensions commissioners have been heartened by the wide-ranging support that has emerged in favour of the overall thrust of our recommendations, and I know that my fellow commissioners will be heartened by the many supportive comments made today. I believe that there is now an opportunity to forge a wide-ranging, cross-party and cross-society consensus in favour of a new pensions settlement: a combination of policies for state and private pensions that can last and that can provide a good basis for people to plan for their retirement. I hope that in the forthcoming White Paper the Government will seize that opportunity.

Lord Oakeshott of Seagrove Bay: My Lords, I declare an interest as a pension fund investment manager for the past 30 years. I first met the noble Lord, Lord Turnbull, nearly 40 years ago when we were both off to Africa as ODI Nuffield fellows. He has since had a spectacularly successful conventional career, and I have been fiddling around on the fringes of business and politics. I pay tribute to him for securing this debate. He is a Cross-Bencher, but I should apologise on behalf of these Benches because some important local elections are taking place today and some of our more partisan supporters are absent for that reason.
	I shall start by responding to the noble Lord, Lord Turner. He knows that he should count us in on the cross-party consensus behind his report. If anything, our view is plus royaliste que le roi or more Catholic than the Pope. We support his analysis and his conclusions, and like the noble Baroness, Lady Greengross, and one or two other noble Lords, if we have a criticism, it is that he did not go far enough. We are conscious of the affordability point, but we would prefer his more radical option. None the less, we fully support the thrust of what he is doing, and we accept that in any compromise everyone will not get exactly what they want.
	This has been an excellent debate, and the degree of support around the House is heartening. I shall pick out four contributions in particular. The contributions of the four noble Baronesses were particularly striking, although they were not entirely on the same lines. I was struck by the point raised by the noble Baroness, Lady Dean, about whether one invests more in one's house or one's pension. I have invested a good deal more in my pension than in my house and, given where annuity rates are now, that is what most people will have to do if they do not have a public sector pension.
	I should have paid tribute at the beginning of my speech to the clear and firm criticism by the noble Lord, Lord Turnbull, of the recent public sector pay deal. We believe that that criticism is entirely justified, and we look forward to co-operating with him in trying to develop a better system in future. The phrase used by the noble Baroness, Lady Dean, was very striking. The noble Baronesses, Lady Greengross, Lady Howe and Lady Hollis, spoke with the mixture of knowledge and passion that we expect and they spoke in particular about the position of women and carers whose position will never be properly resolved until we move to a universal, much more generous and non-means-tested state pension system.
	Means testing is central to the current debate. As my noble friend Lord Kirkwood pointed out, more means-tested benefits for poorer pensioners were sensible when Labour took power in 1997. Many pensioners had been locked out of the party of rising prosperity under Mrs Thatcher and needed urgent help. But that was nine years ago. Sticking plaster over a gaping wound is fine in an emergency, but it is not a permanent solution. It can all too easily hide the need for radical action. That is why the admission by the noble Lord, Lord Hunt, in a Written Answer that virtually half pensioner households now fall within the means-test net is so serious. The noble Lord, Lord Turner, has done a masterly job in warning of the dangers of growing means-testing unless policies are reversed, but the mass means-testing of pensioners is here already. On the most recent figures—for 2003–04—the official estimate is that between 44 and 51 per cent of pensioner households were eligible to claim credit, and that figure is rising steadily. That is a pensions policy heading straight for the rocks.
	Rich people will always find ways to provide for their old age by saving formally for a pension—usually, as the noble Lord, Lord Lea, pointed out, in highly tax-privileged ways—or by building up assets that they can draw on when they retire. Very poor people will, by definition, always find it hard to save and will need to rely on the state. But for the great majority of people on middle and lower incomes, the key test of a successful pensions policy is for the state to provide a straightforward pension on which everyone can rely for a just adequate income in old age, and then know that they will keep every pound that they save for an extra pension on top. Britain's mass means-testing of pensioners destroys future incentives to save.
	The Chancellor of the Exchequer, in interesting evidence to the Treasury Select Committee on 30 March, showed himself to be stuck in a static, backward-looking time warp. He said that pension credit is the first benefit of its kind that actually rewards savings rather than penalising them. Ex post, in a crisis a few years ago, that was right, but ex ante now, looking forward, it is just dead wrong, if one wants to encourage people to save more in future and to build a stronger savings culture, as the Chancellor said later when he was being examined. Mass means saving really makes this problem much worse. Millions more people are now just taking the entirely rational decision not to waste money saving for their old age under the present regime. No wonder that gambling is booming in Britain while saving has fallen through the floor.
	Turning to the national pension savings scheme, which noble Lords have discussed, I am sorry to say I have been deafened by the sound of axes being ground to defend the vested interests of some private sector pension providers. I believe that the recommendation made by the noble Lord, Lord Turner, for a national pension savings scheme is the right one, and costs are vital. I do understand, as the noble Lord, Lord MacGregor, pointed out, the worries about designing a whole new computer system entirely from scratch. I think the noble Lord, Lord Turner, has possibly missed a trick in not focusing more on trying to use National Savings & Investments, which to me is a very tried and trusted brand and quite a good operation. There might well be scope for building on that but the principle is right. I am concerned about some of the alternatives being put forward by private sector providers that, frankly, have not been able to reach lower-income people under the present structure and I do not believe they will.
	Noble Lords should not underestimate the complete collapse of confidence in private sector pension provision. I will be 60 next year and recently told my wife, "It is probably time I bought a pension for you if anything happens to me". She asked how it worked and I said: "You go off to the Prudential or the Legal & General and give them quite a large sum of money and then they promise to pay you an index-linked pension for the rest of your life". My wife, who is a doctor, said: "I would not trust that". My daughter, who is about to become a barrister, said: "Of course not". I said: "Look, I actually know the people who run the 'Pru' and the people who run the Legal & General. They are pretty straight". That is an indication of how far confidence has fallen, even in a relatively serious thing, and no one should be under any illusion about that. That is why I think a national scheme, probably with National Savings & Investments involved, is absolutely vital.
	I wish to deal with the question of how we build on consensus and take it forward. The Low Pay Commission or something similar, perhaps with an element of the Bank of England's Monetary Policy Committee, is important. I personally would be in favour of a long-term commission with representatives from the main parties and obviously the relevant people in the pensions industry. It could, by all means, study things and issue reports but it should have one clear remit—like the Bank of England's Monetary Policy Committee and the Low Pay Commission, which does make one specific recommendation. The key duty for such an independent pensions commission would be to set the state pension age 20 or 30 years ahead and review it every year. It is very important to take that decision, above all, out of politics.
	The key point is reversing means testing and there is clearly a battle royal going on about that in government at the moment. We will see the result of it when the White Paper comes out. I am afraid we have seen, from the appalling attempt by the Chancellor of the Exchequer to sabotage the Turner report before it came out, that he fully realises the threat that report poses to the present muddle-through concentration on means testing. I can only hope—and we will watch with great interest—that wiser counsel will prevail and that radical action, along the lines of the Turner report, will follow soon.

Baroness Noakes: My Lords, it is a privilege to take part in this debate. It was a delight to hear the noble Lord, Lord Turnbull, introduce a debate in your Lordships' House. It was also a delight to hear the maiden speech of the noble Lord, Lord Hastings. If we have contributions like that in the future he will indeed enrich the work of your Lordships' House. I bid him welcome.
	I declare my interests, as recorded in the register, in particular as a director of a number of listed companies, some of which are struggling under the weight of their pension liabilities. The Pensions Commission report rightly addressed solving the issue of long-term pension provision. But we must not lose sight of today's issues, some of which my noble friend Lord MacGregor referred to. I would highlight in particular those who have lost their pensions. The financial assistance scheme is woeful; it is paying hardly anything to hardly anybody. The Government's high-handed rejection of the Parliamentary Ombudsman's recommendations is also unfinished business.
	However, I must concentrate on the topic of today's debate, which is the report of the Pensions Commission. I join other noble Lords who have paid tribute to the work of the noble Lord, Lord Turner of Ecchinswell, and his commission for an excellent report. The commission has emphasised the need for cross-party consensus in order to achieve a lasting solution. The noble Lord, Lord Turner, also emphasised that. The Government seemed to say as much when the commission's second report was published at the end of last year. Let me say that there has been no attempt by the Government to meet the Official Opposition to explore a consensus. I hope the Minister will say today what plans the Government have to achieve consensus, or is that just empty rhetoric?
	We can speculate on why the Government have not sought to explore a consensus with us; it is because there is no consensus within government. A month ago the Chancellor told us that he supported 90 to 95 per cent of the commission's proposals, but he has not told us what is in the 5 to 10 per cent that he does not support. This is important and I hope that the Minister will tell us today precisely what the Chancellor objects to, if, indeed, the Minister knows.
	Let me outline some of the principles which will drive our approach in the search for consensus. The first is fairness and, in particular, we believe that the system must be made fairer to women. A number of noble Lords have referred to that today. The noble Baroness, Lady Hollis, made yet another very powerful speech on that subject. Over time, higher female participation rates will reduce the problem of inadequate contribution but it will not solve it. Other action needs to be taken, and in our view the Government must deal with that in their response to the Pensions Commission.
	I cannot pretend that auto-enrolment, which is a near relative of compulsion, is something I instinctively warm to, but we believe that people should take more responsibility for their financial well-being in retirement. The alternatives of ever higher taxation and ever increasing pensioner poverty are not acceptable, so we accept auto-enrolment as a pragmatic way forward. But our acceptance of auto-enrolment is subject to an important caveat, which is that the system must be effective and simple for employers to operate. It must minimise additional burdens, especially those on smaller businesses.
	A related area is compulsion for employers' contributions. We fully understand the logic behind enhancing employees' direct contributions but do not see employers as having deep pockets which can provide funding. The Government must make it clear that the employer merely facilitates the process of the employee saving for retirement. Anything else would be a tax on jobs. The role of compulsory employer contributions must be seen not as adding to payroll costs but as redirecting them. Of course, this would require quite a long transition period to avoid mass opting-out. My noble friends Lord Hunt and Lord Skelmersdale also made powerful points on the need for a managed transition if this is to succeed.
	There is also a very real danger of levelling down, with employers seeing the introduction of compulsory contributions set at a fixed level as being normative. We, of course, hope that employers will continue to contribute at a higher level than 3 per cent. But we should be under no illusions that in a world of cost and margin pressures, controlling costs will be a business imperative. This again argues for a managed transition so there are no shocks to the system.
	The report does not address public sector pensions, but it does highlight the growing tale of two workforces. The public sector workforce has high participation in general final-salary pensions and early-retirement benefits underwritten by the taxpayer. Private sector provision is declining rapidly, as we have heard, and increasingly transferring all the risks of investment and longevity to the individual. No responsible government can afford to ignore that divide, and I very much welcome the observations of the noble Lord, Lord Turnbull, on that. We shall look to the Government to address it in their response.
	The savings vehicle proposed by the Pensions Commission for the national pension savings scheme is not without controversy. For us, there are two key principles. First, under no circumstance must the NPSS be in any way an arm of government. The public sector is littered with grand projects that have been badly managed—the Child Support Agency and the Rural Payments Agency, to name but two current cases. I support fully what my noble friends Lord MacGregor and Lord Skelmersdale said on that.
	Secondly, the decision on the kind of savings scheme implemented should be based on a pragmatic view of what works. I say with the greatest respect to the noble Lord, Lord Turner, that the Pensions Commission's justification of the NPSS model reads a little like an economics textbook. In my experience, economic textbooks are not always the best guide to what works in practice. I will not enter the fray on how many basis points of costs is the right level. The key issue for us will be what marries the best incentives for low-cost performance with those for best investment performance, because that trade-off will produce the best result for individuals' pensions.
	What of the level and type of state pension provision? We recognise that the Government have sought to address pensioner poverty, but it has been at a dreadful price: a massive increase in the number of pensioners subjected to means testing. Many, including the noble Lord, Lord Oakeshott, and the noble Baroness, Lady Greengross, referred to that. It is simply not right, and pensioners themselves know that, which is why the take-up rate is only around 60 per cent of those entitled to it. The Pensions Commission's proposals taken in the round, according to its calculations, result in a small decline in means testing instead of a relentless increase to around three-quarters of the pensioner population. The question that we will ask is: is that good enough?
	Of course, the answer to that question must be weighed against the affordability of changes. The commission's report claims that its proposals are affordable; they probably are in the long run. But the calculations, particularly in the medium term, depend crucially on commandeering the savings in pension costs that arise as the state pension age for women is equalised with that for men between 2010 and 2020. With so many other calls on public expenditure in the medium term, not least on health, education and defence, we should be clear that hypothecating those savings to pay for pensions increases from 2010 onwards is not an easy option for any Chancellor.
	I shall conclude by returning to the issue of consensus because the noble Lord, Lord Turner, emphasised it. He also emphasised, as did the Pensions Commission, that the proposals are a package and are not to be cherry-picked. I sympathise with that completely, and with the wish expressed by the noble Baroness, Lady Hollis, to avoid gender-based cherry-picking. But consensus normally involves compromise, and it seems that the best outcome is one on which all parties can agree between themselves, provided that sufficient improvements are achieved; better that than long-term disaffection with particular parts of a package. I hope that the Government will now start to walk the talk on consensus, and I make it plain that my party stands ready to contribute to that debate.

Lord Hunt of Kings Heath: My Lords, this debate could not be more important. I thank all noble Lords who have taken part in it; it has been very good. I am most grateful to the noble Lord, Lord Turnbull, for initiating the debate and speaking from his unique viewpoint.
	I congratulate the noble Lord, Lord Hastings, on his very interesting insight into security and happiness for older people. I liked his reference to legislative hyperactivity syndrome. I am a moderate sufferer so far although, with the prospect of pensions legislation, I may suffer more severely in future. I am particularly interested in his remarks about the Birmingham projects and glad to hear that they have been so successful.
	I am delighted that the noble Lord, Lord Turner, took part. We owe him and his fellow commissioners a considerable debt. There can be no doubting the breadth and quality of the report and its contribution in helping this country to face up to one of our most momentous challenges over the next 20, 30, 40 or 50 years. Of course I am as committed as anyone is to seeking consensus. There is no question but that we need consistency over the long term to restore people's confidence in the pensions system. The setting-up of the Pensions Commission, the various events held and the future publication of a White Paper all seek consensus and we are determined to continue those discussions.
	As ever, inevitably I am somewhat constrained in what I can say about the contents of the White Paper but I will respond to some of the broad themes debated. Perhaps I ought to start by commenting briefly on concerns raised about government policy, some of them rather familiar to those of us who enjoy taking part in these debates. I make no apology for pension credit. I know that noble Lords are concerned about the impact of means testing and the potential number involved in future, as the noble Lord, Lord Oakeshott, said. But in 1997 we took a decision to concentrate on dealing with pension policy as a priority, and that is what pension credit has achieved. We succeeded in helping more than 2 million pensioners escape from the absolute poverty line. I can make no apology for that decision.
	My noble friend Lady Dean put it well when she referred to pension holidays, the pension mis-selling scandal, and the impact of the falling world stock market and of rising longevity, as significant factors in the loss of confidence in the private pensions market. We have taken action, which is why we have the Pension Protection Fund and the new Pensions Regulator. I understand the pressures, described today, on companies and pension funds as a result of the new regulatory framework and accounting standard. I never seek to underestimate the challenges that that causes. Equally, it was essential that the Government took action to restore confidence in that sector.
	The noble Lord, Lord Turnbull, raised the theme of the abolition of payable tax credits. The £5 billion figure often quoted is, I believe, a gross exaggeration and, as he will understand, must be seen in the wider context of corporation tax reforms that took place at the same time.
	We have again debated public sector pensions. The financial cap and target set by the Chancellor has been met as a result of the decisions taken by the Government. The turnover rate of civil servants of about 10 per cent per year indicates that by 2033 about 85 per cent of civil servants will be in the new pension scheme. That is not very different from how private sector companies have approached their pension schemes, when they have closed existing schemes to new entrants but retained their provisions for current members.
	The noble Baroness, Lady Noakes, will know that we are expediting a review of the financial assistance system. As for current payments, we are working hard with trustees to do everything we can to speed up payments.
	The noble Lord, Lord Kirkwood, raised the issue of demographics, as did the noble Baroness, Lady Howe. The noble Lord will know that, alongside the question of pensions, my department is particularly concerned with demographic issues. Our welfare reform agenda, produced in a paper some months ago, seeks to get more than 2 million more people into work. We aspire to raise the number of people in work from 75 per cent of the working-age population to 80 per cent. That is a huge challenge but it goes with the grain of the report of the noble Lord, Lord Turner, including the anti-discrimination legislation for older people. We can see those issues running together. I very much hope that the settlement for my department will drive further efficiency and benefit simplification—an intention which the noble Lord and I share.
	In examining the proposals of the noble Lord, Lord Turner, we have said that any new model must be underpinned by five key tests—it must be fair, affordable, simple, sustainable, and, importantly, encourage the individual to take personal responsibility for building an income in retirement that meets their aspirations. Finding the right approach to achieve a personalised, flexible tool that can enable all working people to save at low cost will undoubtedly be a critical element in any reform of the UK pensions system. While an effective welfare system must provide an adequate floor below which no one should be allowed to fall, it must also enable a straightforward route for individuals to provide for themselves.
	For the state to achieve the role of enabler, however, we need to achieve two of the commission's central objectives: first, to encourage individuals and their employers to provide for a pension that will deliver a level of earnings replacement in retirement that meets the individual's aspirations; and, secondly, to ensure that everyone has the opportunity to save at the lowest cost.
	My noble friend Lord Howarth spoke of the need for realism in this debate and of widespread ignorance and the culture of indebtedness. I would add to that the point raised by the noble Lord, Lord Oakeshott, about a general public lack of confidence in the current systems. It is clear that if we are to overcome that and we really want to empower individuals to take greater responsibility, we have to help them to a much clearer understanding of the state's responsibility and what they need to do for themselves. Historically we have been slow to do that, but since the launch of the pension forecast in October 2001, nearly 6 million combined pension forecasts have been issued. That is a good start and we need to build on it. Alongside that, the noble Baroness, Lady Greengross, mentioned the need for simplicity so that people can understand the various options and products on offer.
	The noble Lords, Lord Hunt and Lord MacGregor, spoke of the need for greater financial education particularly among younger people. I very much echo and endorse that. I also accept the strictures of the noble Lord, Lord Hunt, that the workplace is an important place in which financial education and support can be given. The role of the employer is going to be key if we are to create an environment where people can make provision for their own future. Many employers already contribute more than the 3 per cent proposed by the commission. In fact, in 2004, nearly 80 per cent of funded pension contributions came from employers. The employer is important and there is no question but that an employer contribution provides a clear and unambiguous incentive for employees to save.
	I say to the noble Baroness, Lady Noakes, that the argument on compulsory employer contributions is finely balanced. Certainly the consensus from our national pension debates came out firmly on the side of compulsory employer contributions. But we have to think carefully about how that would impact on small businesses and what we need to do to safeguard their competitiveness while recognising that people working for small business are disproportionately not saving enough for their retirement. I noted the comments of the noble Lord, Lord Skelmersdale, on those challenges.
	My noble friend Lord Rosser made some important points on the detail of the NPSS proposals. We are looking at a model that should deliver a low-cost savings vehicle and that minimises the burden on employers; is portable as people move between schemes—and more flexible working makes that very important indeed; promotes individual responsibilities; and is simple and transparent for contributors. The noble Lord, Lord Turner, set the standard to beat with the proposals in the commission's report. We have, as noble Lords said, invited industry to come up with better proposals. We are considering those very carefully at the moment.
	The noble Lords, Lord Hunt and Lord MacGregor, raised the issue of levelling down. I think that the point was answered fairly by the noble Lord, Lord Turner. The substantive point he makes is that huge numbers of people currently are not covered by a private pension. The great goal of the NPSS is that if by auto-enrolment we see a substantial increase in the numbers of people covered, that will be a great advance overall. There is some balance and some risk here but we will have to consider it. The noble Lord, Lord Hunt, was concerned about whether auto-enrolment will work. The evidence I have gathered from meetings with companies is that many staff are prepared to look a gift horse in the mouth when companies offer a completely voluntary scheme and will not join it whereas take-up has increased enormously in auto-enrolment schemes. We have to assume that it will work.
	I come now to one of the most important questions that has been debated, the issue of fairness. Any new system has to be more inclusive and fairer to all sections of society than what went before. When we talk about fairness, we think in particular about the position of women. At the moment, only about 30 per cent of women reach state pension age with a full basic state pension, compared with about 90 per cent of men. Left unchanged it will take the current system 20 years to bridge the gap. There is very broad agreement among all stakeholders that any new system must value vital caring roles as it does working. My noble friend Lady Hollis, with other noble colleagues who have spoken today, has worked to develop the case for a substantial and lasting change. She demonstrated again today the level of experience and expertise that she brings to the issue. She spoke graphically about the issues of dependency and longevity, the challenge for women in particular who have spent many years raising families and are then called to new challenges to help older relatives who also need substantive support, and the impact that that can have on their ability to go to work and the fluctuating nature of that kind of support.
	My noble friend knows that we have introduced a range of measures to improve the position of women, and I pay tribute to her for the pivotal role she played in that. Pension credit has had a major impact in lifting many women out of absolute poverty. The second state pension means that the proportion of women now accruing significant state pension rights is similar to that of men, while almost all of the 1.9 million carers and two-thirds of the 5.8 million low earners helped are women. But we can and must do more.
	One approach favoured by the noble Lord, Lord Turner, is to introduce a universal basic state pension for those aged over 75. Another would be to modernise the contributory principle so that it fully recognises contributions to society such as caring as well as NI contributions. In every case there is more than one way of achieving the objectives that the noble Lord, Lord Turner, set out. I readily acknowledge that the citizen's pension offers great simplicity more quickly and a route to greater equality for women. Yet it does so at the cost of helping better-off pensioners as well. It moves away form the contributory principle and carries significant implications for the critical third test of affordability, which I will come to. However, there is broad consensus on the desired outcome: a system of universal pensions for the UK.
	The citizen's pension will also need some sort of residency test which may be difficult and expensive to administer. Some people will necessarily fail it. My right honourable friend the Secretary of State is writing to the Women's Pension Network on these issues and I will ensure that a copy of the paper that is sent is placed in the Library. My right honourable friend said last month that we are looking to,
	"develop a new contributory principle"
	that will "value social contributions equally" with workplace contributions so that women who care for children and older people can build up a full pension.
	That links us very well to the question of means testing, its relationship to the basic state pension, and the advocacy of those who wish to restore the earnings link. I enjoyed the recantation of the noble Lord, Lord Turnbull, on that matter. It is wonderful what free thinking we can do when we lay down the burdens of office. It is an important question and we take the analysis of the noble Lord, Lord Turner, seriously. I listened with great interest to what the noble Lord, Lord Oakeshott, had to say. Despite the temptation to respond to the noble Baroness, Lady Noakes, and tell her where we are within government, it is, as she will know, more than my life is worth—particularly with all the rumours about reshuffles—to go any further today.
	As I said, without pension credit we could never have lifted so many pensioners out of absolute poverty. Moreover, my understanding—although it is very risky to quote Turner to Turner—is that the noble Lord, Lord Turner, did not argue against the continuance of means testing; he said that large-scale and unpredictable expansion of it would be the major problem. As we said, our aim is a long-term framework for pensions based on a decent basic state pension with a much simplified way for people to save. And of course it has to be affordable.
	The question of affordability cannot be ignored if we are talking about consensus and stability. The commission proposed an increase in the state pension age from 2020, to offset the increasing numbers in retirement and to pay for an enhanced state pension. Certainly, given the dramatic increases in longevity over the past two generations, a gradual increase in state pension age, linked with improvements in state pension level, looks like the right way forward. However, I would caution noble Lords that we have to be mindful that state pension age and actual retirement age can often be separate things. At present, almost three-fifths of 64 year-old men are no longer economically active, so an increase in the state pension age alone may not deal with the core problem of working lives ending too soon. I would link that back to our wider welfare reform proposals. The aim, to get 1 million more older people back into work, will be critical not just to the issue of pensions but to this nation's future prosperity. That is where the age discrimination legislation is so important.
	In conclusion, the noble Lord, Lord Turnbull, said at the beginning of the debate that the issue has been too long in the "difficult tray". He is right. Too often in the past successive governments have tinkered with the system to make understandable short-term fixes, often with the unintended consequence that the citizen has been left confused and unsure of their long-term saving plans. The noble Lord, Lord Turner, presented his report as an integrated package. I can assure noble Lords that our response will be an integrated one. The Government understand and recognise that we have a wonderful opportunity to create a lasting consensus and a comprehensive pensions system to last for the next 50 years. I invite noble Lords to continue the discussions to seek such a consensus. We as a government are determined to take that opportunity.

Lord Turnbull: My Lords, this debate has demonstrated the value of this Chamber as a forum for national debate. I suspect that, had we delayed much longer, the die would have been cast and the White Paper would have been published before the views of the House had been heard. It has been a popular debate. The downside is that, with so many speakers and so many views put forward, it is difficult to do justice to them individually. However, I am grateful to the noble Lord, Lord Hastings, for setting this debate in a wider context and to the noble Lord, Lord Eatwell, who is the author of an economics textbook, for bringing us back to the underlying analysis. I am particularly grateful to the noble Baronesses, Lady Howe, Lady Hollis and Lady Greengross, for filling in the woeful gaps in my speech on the implications for women and carers.
	I detect a move towards consensus. I think that that is helped by the depth of analysis and coherence in the Pensions Commission's proposals. This package is like a sudoku: all elements are interlocked; if one gets one wrong, it throws all the others out. For example, one reads reports of a compromise on earnings indexation. It could be a lower number or a later starting date applying only to those over 75. The problem is that if the basic pension relative to earnings sinks too low, means testing will be higher and the attractiveness of contributing to the NPSS is undermined. So the noble Lord, Lord Turner, is absolutely right to say that it must be considered as a package.
	I can see that people are already beginning to move on beyond certain broad principles to practicalities of phasing, governance and logistics, and that is welcome. I have two other responses, one of which is on levelling down. There will be competition among employers to employ good people. If you are trying to recruit good people, it will not cut much ice to say, "I am a 3 per cent employer", compared with someone who says they are a 5 per cent or 6 per cent employer. On the subject of recantation, I suspect that the Chancellors of the day and the Secretaries of State of the day and probably Members of this House may one day join me in their mea culpas.
	Some policy commissions, royal or otherwise, gather dust on the shelves, ignored or at best cherry-picked. I am confident that these documents will succeed in charting a way forward. Therefore, I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

Latin America

Viscount Montgomery of Alamein: rose to call attention to recent developments in Latin America; and to move for Papers.
	My Lords, we now move from domestic pensions to Latin America, which is quite a different subject. My thanks are due to the noble Lord, Lord Williamson of Horton, for allowing me a part of the Cross-Bench day for this debate. I made my maiden speech in 1976 and a valedictory tour in 1999 on the same subject, just prior to being reformed from this place. In a way, today's debate follows up the debate initiated this time last year by the noble Baroness, Lady Hooper. I pay tribute to her for pursuing the Latin American cause with great vigour over many years. I am therefore glad to be recycled here and to be in a position to support her on these issues. Like the noble Baroness, Lady Hooper, I have the honorary position of being a vice-president of Canning House—as indeed, is the noble Lord, Lord Brennan, who I hope will be here to speak later. By sheer coincidence, a debate on the same subject was initiated in the other place two days ago by Bob Blizzard, the Member for Waveney, who is among other things chairman of the All-Party Parliamentary British-Latin American Group.
	The issue is thus very current, so I offer a brief reminder of what comprises Latin America. Latin America is a sort of shorthand for a number of countries. Among its 19 republics, Brazil speaks Portuguese, while from Mexico to Chile all the others speak Spanish. They all derive their culture from the European tradition, blended with that of indigenous peoples plus a mixture of African peoples in greater or lesser degree. The continent spans from the borders of the US to the fringes of Antarctica. The countries are all established democracies with regular presidential and parliamentary elections. The possible exception is Cuba, which is extremely stable, but has a president for life—like some of the people in this Chamber. However, they all operate very much in unison as a regional bloc in international fora, such as the United Nations and the Inter-Parliamentary Union.
	This great continent of more than 500 million people includes two countries, Mexico in the north and Brazil in the south, that feature in the major economic league and are outreach members of the G8—an important area. Much has happened and continues to happen, with 12 republics holding elections between the middle of last year—when the debate initiated by the noble Baroness, Lady Hooper, took place—and the end of 2006. These have so far produced a swing to the left of centre and this trend would appear to be continuing. To my mind, what this really represents is a different approach to social and economic development and improved income distribution in a very dynamic continent where 40 per cent of the population live in poverty.
	However, development does not only depend on whatever notion a newly elected president may conceive as the way forward, or on the volume of megaphone rhetoric from some presidents, which the international media love. There is also good historical evidence showing that the nationalisation of assets seldom brings economic benefits to the country, and certainly frightens off direct foreign investment—a vital ingredient for developing countries. In my experience, multinationals provide a great deal of employment and are very conscious of their environmental and social obligations in all the countries in which they operate.
	What is really needed for development are the right structures. That means a good balance between the executive and the legislature, a properly paid and stable civil service, plus a completely independent and well established judiciary. In other words, what is essential are effective and wholly honest structures which can ensure distribution of the national wealth and avoid it being diverted by corruption. Unfortunately, that sort of structure has parts missing in some countries in Latin America where they are much needed. However, I am glad to say that Chile is a notable exception, where wealth has been created and distribution is taking place.
	Historically, the USA has considered Latin America to be in its backyard but, since President Kennedy, it has really done little about it, despite the fact that only Mexico has more Spanish-speaking people than the US. Relations at present are at a particularly low watermark. I have a feeling that Latin Americans are not impressed by Britain's following the US into foreign conflicts in an attempt to impose democracy on countries that have never experienced it in their long histories and for which it is counter-cultural. It would be better to concentrate our efforts in more fertile areas such as Latin America, where we have been involved in a most constructive way since independence 200 years ago.
	Let us consider what we are doing in this great region. Very little, I am sorry to say. Despite the recent successful visit of President Lula from Brazil, it hardly rates a passing mention in the recent government White Paper on foreign policy priorities. Last year, the noble Baroness, Lady Hooper, described our position as benign neglect, with which the noble Lord, Lord Triesman, understandably disagreed, but I fear that nothing much has changed. Four embassies have been closed and posts have been cut in size and status, which does not give much cause for enthusiasm. It is very depressing and not very good for morale. The Treasury under Gordon Brown appears to have removed the funds, and No. 10 appears to have removed the authority.
	What can be done to reverse this trend? A great deal, in my view. The Foreign Office was always the smallest and most efficient department in Whitehall. It has been much reduced, if not emasculated. If Britain is to be an effective force in the world, the Foreign Office needs to be reinforced and re-empowered to its former glory. I would therefore like to make a few radical suggestions. I hope that the noble Lord, Lord Triesman, will accept that these are based on over 50 years' experience of promoting Britain in Latin America and Latin America in Britain in a spirit of good will, a great deal of passion and much enthusiasm.
	My first suggestion relates to trade promotion. This is currently a mix between UKTI and the Foreign Office. This area of activity should be wholly centred in the Foreign Office where it once was—trade promotion should be moved from the DTI to the FCO. Overseas posts are where the knowledge of the market is located and where businessmen refer to when travelling, so they should be strengthened so that they can deliver and report back the opportunities to the home base.
	My second suggestion concerns overseas aid. DfID is a huge department with a budget three times that of the Foreign Office. This should also be transferred to Foreign Office control, for precisely the same reasons as I gave for trade promotion. However, as Latin America receives little aid, this comment is really about Africa, where the direct funds often disappear or are frequently recycled elsewhere. In Latin America, the limited funds are mainly dispensed through international organisations and NGOs, with the result that a great deal is dissipated in administration and the UK gets little or no credit. In addition, the criteria for crisis support are very inflexible. I will give an example: the disasters in El Salvador and Guatemala caused by recent hurricanes and volcanic eruptions destroyed much of the agricultural production on which those countries' export trades depend. These are currently classified as middle-income countries, which allows for only limited support. But a disaster can instantly reduce a middle-income country to poverty level, which would not be reflected in international statistics for several years, by which time the country concerned might have recovered by its own initiative—they are a very hard-working lot.
	Thirdly, at the risk of embarrassing the noble Lord, Lord Triesman, I ask myself why he is only a Parliamentary Under-Secretary. His travels and actions since his appointment indicate a serious interest, and this has been much appreciated in the region and by the Latin American diplomatic community in London. Historically, Latin America deserved a Minister of State and usually had one, but somehow that deteriorated after the retirement of the noble Baroness, Lady Symons, who is a shining example of when that model worked well and why it is so important to have the Minister of State for Latin America in this House. Another example was the late Lady Young, who, in her day, was also spectacular in that capacity. We had two very good examples of Ministers of State for the Foreign Office in this House working extremely well.
	These three suggestions would put Latin America back in its rightful place as a continent with which we have so much in common; we are currently neglecting it in a most short-sighted way. There are a great number of very distinguished speakers in this debate, which is a very good thing. I am sure that they will cover all sorts of different aspects and I very much look forward to their contributions. I appreciate that the Minister may not agree with what I have suggested and that he is unlikely to be able to give any specific conclusions to my proposals. However, I hope that I have provided some food for thought and look forward to his comments. I beg to move for Papers.

Baroness Symons of Vernham Dean: My Lords, I thank the noble Viscount for initiating this debate today and for the excellent speech that he has just made in introducing our discussion. Between the noble Viscount's departure and subsequent return to this House, we have missed his valuable contributions to foreign policy debates on Latin America. His knowledge and his expertise—what he described as his passion—are born of a vital and vibrant interest in that part of the world, an interest that is grounded in extensive contacts and regular dialogue at a personal level. He is always interesting and provocative, and he did not disappoint us today.
	For any country, economic health is vital to political stability and well-being. Most countries in Latin America have recognised the importance of trade and investment in securing that stability. So I shall concentrate my remarks today on the trading relationships with Latin America and ask the Minister how he perceives those relationships developing.
	There is a variety of co-operation agreements between individual countries or groups of countries and the European Union. Most of them are based on three pillars: economic co-operation; institutionalised political dialogue; and the strengthening of trade relations. All those agreements, be they through Mercosur and the Andean Community, or with central America, are important, but perhaps I may ask the Minister first about the role of Latin America in the World Trade Organisation talks on the Doha development round.
	When the EU Commissioner, Peter Mandelson, visited Argentina, Brazil and Chile at the end of March, he concentrated on trying to build an alliance between those countries and the European Union for WTO talks. Can the Minister update us on whether Mr Mandelson had any success, either in drawing Latin America's position as a whole closer to agreement with the European Union, in dealing with some of the evident bilateral problems—for example, disagreements over intellectual property between Brazil and Chile—or in addressing issues surrounding direct foreign investment elsewhere in the region?
	Many international companies have a presence in the Argentinian market, for example. The UK is the sixth largest investor, with roughly 5 per cent of the total foreign direct investment. Moreover, more than 30 top UK companies have investments in Argentina. If these investors are to sustain their position, they need more certainty, but the attitude of the Argentinian Government is at best ambiguous. They know how desperately their country needs foreign direct investment, yet their president encouraged a blockade against Shell in February 2005 and several foreign investors have international arbitration claims outstanding.
	That position appears to be very different from that which prevails in Brazil, where the UK is also a leading investor. In the past few years, we have seen British Gas in Sao Paolo, Glaxo in Rio and Pilkington in Sao Paolo, as well as the very welcome recent announcement from ICI of investment plans for up to $50 million. Brazil has made some real progress, under both the previous and current administrations. Does the Minister believe that this opening of its economy is the dominant economic driver in the region, or that the more restrictive and difficult investment climate in Argentina is more appealing to its Latin American neighbours? Unless these issues around foreign direct investment are resolved in the region, the impact on the WTO negotiations could be serious.
	What is the Government's view of the role of Latin America in those discussions and the role of Brazil in championing developing countries? Is that role realistic in view of the fact that Brazil will shortly be the 10th largest economy in the world and not remotely comparable to some of the poorest countries in the world that it claims to represent in those talks? How does the position on intellectual property which Brazil has adopted with regard to the pharmaceutical industries really contribute to the battle against malaria, tuberculosis and AIDS in Africa?
	The agreements between the EU and Chile and the EU and Mexico are to be welcomed. They cover variously trade, investment agreements and, importantly, rules on competition, intellectual property and dispute settlement. Do those agreements between the EU and individual countries offer a more realistic way forward than the pursuit of agreements between the EU and the Mercosur group, or between the EU and the Andean or central American groups?
	On the brink of the fourth EU/LAC summit, which is due to take place in Vienna this month, will there be progress on the EU/Mercosur agreement, and will it be possible to open negotiations on association agreements with the Andean and central American groups? If such progress cannot be made, perhaps the time is now right to pursue what I might describe as the Chilean or Mexican route instead. In that context, I endorse one of the questions of the noble Viscount; that is, where and how is UK policy on trade and investment conducted?
	Over my working lifetime, this issue has bobbed up with tedious regularity. Valiant attempts have been made by both Conservative and Labour governments to deal with the issues, but I am afraid that there is a bit of good, old-fashioned turf war, not just between Ministers—who, I am sorry to tell the Minister, are birds of passage after all—but far more tellingly between Whitehall officials. A permanent secretary who cedes ground by letting an important part of his department's portfolio go to another department is widely perceived to have let his department down. So the trade Minister now works primarily in the Foreign Office, but responds not only to the Foreign Secretary but to the Secretary of State at the DTI. Trade policy, however, is primarily conducted in the DTI, with input from the Foreign Office on broad economic issues and political impact. UK Trade & Investment, under its admirable new chief executive, Andrew Cahn, sits between the two departments and, in theory, responds to the trade Minister. I shall not even begin to deal with the position of the ECGD, which responds to the Chief Secretary of the Treasury.
	All this may sound like an excellent example of joined-up government, but, in my experience, having different groups of civil servants working on the same issues but ultimately responding to different Secretaries of State is rarely a recipe for effective decision-taking, let alone operational efficiency. The more I have thought about this, the more I believe that the noble Viscount is right that trade and investment effort should be under one roof, with consultation being carried out as necessary. I am bound to say that I think that that roof is the FCO roof.
	This issue is crucial in our relationship with Latin America, because the Latin American economies are moving. Brazil may be going slowly, but analysts say that its economy will overtake in size that of Mexico and Australia. Chile has become a beacon for economic and political stability. Its growth is 6 per cent this year, and opportunities for trade and investment in the public and private sectors are good. Mexico's trade and investment have grown at a steady rate. Public and private partnerships are offering real investment opportunities for British business. Venezuela should be another prime target. Our exports there shot up by some 25 per cent in 2005, and the opportunities in the oil and gas sector are self-evident.
	The economic importance of these countries is growing. We need a clear focus on our trade and investment relationship with them. We must of course achieve that through the WTO and our European agreements, but, crucially, we must do it also through bilateral agreements, because we need to build the United Kingdom's trading links with these countries for the future.

Lord Walker of Worcester: My Lords, I was in another place for 31 years and I cannot remember following two speakers and agreeing with both on almost everything they said. On this occasion, I have that pleasure. I add my congratulations to the noble Viscount on instigating this debate. It is a joy to see him back and active in this House, and once again leading the activity on Latin America.
	There has never been a time when British diplomacy needed to be more active in Latin America. The noble Baroness mentioned the emerging world trade round. This trade round is very different from anything we have previously seen. When China joined the WTO, everybody said that it would make an enormous difference, and they were right. Mercosur's coming together meant that its members had the power of collective negotiation if they wished to use it. We are seeing an enormous amount of diplomatic activity by China in Latin America and nowhere near enough by either this country or by Europe as a whole, which I regret.
	China, due to its import policy, has transformed many Latin American economies over the past 18 months, and it is interesting to see how its diplomacy has followed. The president of China arrives in Argentina, expresses his great affection for it and his delight that he has been able to buy its products at prices which are good for its consumers. He says that he wants to go on buying its products—its food, minerals, oil and gas—and would be very happy to invest in Argentina as well. The reaction of the people of Argentina was, "What nice people the Chinese are. They are buying our goods, they are saving our economy and they want to continue being active partners with us". Leading Chinese figures have in the past six months been to virtually every Latin American country, saying how much they want to invest and purchase their goods, but also to discuss with them the world trade round.
	I hope that there is a recognition both in the United States and in Europe that China is not alone in negotiating the world trade round. It is assembling enormous allies throughout the world. It is partnered with India on a considerable scale. Many of the Asian countries are following the Chinese on these trade negotiations. Many African and Latin American countries are now linking up with China on these trade negotiations. We might find that the United States gets a great surprise.
	As Secretary of State for Trade and Industry, I had the privilege of leading the British delegation way back in the early 1970s to the Tokyo trade round. It was the first trade round where we had been part of the European Community. I quickly discovered the clout of the European Community and of the United States. The main negotiation was between the United States and Europe, with a few fragments then thrown to the rest of the world. That has been true of almost every trade negotiation since, but maybe not on this occasion.
	When President Bush came to power, he said that his main ambition as president was to bring about a Free Trade Area of the Americas in his first term of office. He said that for sensible reasons. He knew Europe was expanding and would have greater clout in trade negotiations. He knew China was probably coming into the WTO and America's negotiating power would be weakened. If he could join up all the Americas into one trading group, obviously led by the United States, it would give him much more power in world trade negotiations. I am afraid that he has failed in this.
	NAFTA was created, with Mexico, Canada and the United States as one group. As far as the rest of Latin America goes, if anything they are more hostile to the American viewpoint than they were years ago. They are more hostile because President Clinton, having succeeded in getting NAFTA with Mexico and Canada, then called all the presidents of Latin America to Washington. He said to them, "We are very much in favour of NAFTA, but we are not interested in all of you joining. The only one that we are interested in joining is our friends in Chile". Chile was rather pleased about this, but the rest of Latin America was rather dismayed when the president of the United States said that he did not want to negotiate with them. The negotiations with Chile were quite difficult. Congress had made enormous difficulties over NAFTA in the first place.
	I am afraid that the United States is not going to be all that strong in this trade round, and nor is Europe unless we can get allies and have understandings. The noble Baroness quite rightly questioned the progress that Commissioner Mandelson has made. It is terribly important that Mercosur has a good relationship with the European Community.
	I was in Argentina the week after Mercosur was created, with the then Argentine foreign minister, Mr Di Tella, a great friend of this country, who spent many years at Oxford when he had been kicked out by various military dictators in Argentina. I congratulated him on the creation of Mercosur. He said, "Peter, it is a miracle. I have created the equivalent of the European Community without a Commission". I had some desire to congratulate him. They do not have a Commission. That may mean that they do not collectively negotiate, but they will certainly discuss everything together. Our relationship with Mercosur in the next few months is crucial. If we do not establish good relationships and a good understanding of its negotiating position, the trade round will be in great difficulty. I even fear that if the trade round becomes too tough, because of the negotiating power of China and its many allies in Latin America, Africa and parts of Asia, then it might come to a point where the United States withdraws from the trade round. If that happened, the whole thing would collapse. That would be an enormous disaster for the whole world.
	Latin America is also moved by the fact that it has a lot of primary products. We are moving from a period when the manufacturers, such as ourselves, had enormous power and the primary producers had none to a period when the primary producers have ever increasing power, finance and strength and the manufacturers less. The United Kingdom can play an important role in the development of those primary products. The development of Latin America's manufacturing base will also be important.
	I still find it unbelievable that in this country we have an education system in which Spanish is neglected as a language. Here is a great part of north America, nearly the whole of Latin America and part of Europe all speaking Spanish, and there is hardly any Spanish teaching in our education system.
	Both the noble Viscount and myself have been active in the chambers of commerce for many years. We are bored to distraction at constantly attending many committee meetings of chambers of commerce connected with Latin America, and many dinners and other occasions. However, those chambers of commerce need to be encouraged. I agree with the remarks made by the first two speakers in the debate about the importance of getting the Foreign Office firmly back in the seat. It is important that every encouragement is given to trade and industry in this country to seek out the markets of Latin America. Let us have a lot more active diplomacy in the next few months and a lot more recognition of the swaying power in the coming world trade round of Latin America as a whole. If that can be achieved, it will be to the benefit of Latin America and, I believe, to the benefit of this country.

Baroness Thomas of Walliswood: My Lords, for the second time in a week I wonder how I have the courage to intervene in a debate which has so far produced such expert speeches.
	I thank the noble Viscount for giving us an opportunity to talk about this important subject. I can never remember whether we met in Peru 35 years ago or in Cuba somewhat more recently, but we have known each other for a very long time. More or less wherever one goes in Latin America, the noble Viscount has either just been there or is just about to arrive.
	I recently revisited Peru, with the IPU, my first visit for more than 30 years. I was stunned once again by the size of the country, the wealth of its historical sites, the flowers, the landscapes, the climate zones and the people. In the late 1960s I was acutely aware of the poverty and of the geographical obstacles to good government. Power was in the hands of a white elite and the indigenous population was more or less ignored. In the intervening years Peru has suffered from the growth of the drugs trade, like other South American countries, and particularly from 20 years of conflict, particularly in the Andean zone, during which some 70,000 people, mostly Andean peasants, died. This was a conflict between Maoist terrorists called Sendero Luminoso—the leaders all with smart degrees from the Andean universities, more disgrace on them—and the army. It is difficult to decide which was the more violent and frightful in the way it carried out its business.
	In 2001 a commission for truth and reconciliation was established. We met several of its members while we were over there. In two years the commission itself established the death toll and highlighted the need for restorative justice, reparation for victims and the re-creation of civil society. It has also pointed to the need for access to health services and to education for the whole of Peruvian society, not just for the wealthy, together with the restoration of human rights and the punishment of the guilty.
	When we met the members of the commission, they were not as confident as one would have hoped that their recommendations were being heeded by politicians. No individual reparations have been made. The armed forces are partly protected against accusations of wrongdoing by the existence of a special military supreme court. On the other hand, the press is beginning to show up the military background of some current presidential candidates and progress is being made in education and health.
	It is important to recognise that democratic elections for the presidency were taking place. As the noble Viscount reminded us, democratic elections have been taking place over the past year or so and will continue to do so. There is quite a broad spread now of something like proper democratic elections and proper democratic procedures. There are two people in Peru left in the ring—Alan Garcia, the left-wing leader of the only real political party in Peru, and Umala, the indigenous candidate of unknown qualities, to say the least. One could be a little ruder, but I do not want to abuse the privilege of this House. This is a great tribute to the re-establishment of a culture of good management of elections by Peruvian NGOs. I should like to say at this point what I have said before in private meetings with the Minister and with other Ministers. Wherever we went, the role of DfID in supporting the re-establishment of civil society was widely praised. Its disappearance is mourned. While I understand that we cannot give aid, I hope that we shall continue to give technical advice and assistance in such matters as teacher training and improving the way in which civil society works.
	Much discussion is ongoing in academic circles and, as we heard from the noble Lord, Lord Walker, in other places as well, on the similarities or differences between the so-called new leaders of south America—Hugo Chavez in Venezuela, Umala in Peru, if he succeeds, Morales in Bolivia, even Lula in Brazil and Kirchner in Argentina. To my way of thinking their exact position in relation to the left, right, Cuba/United States—all that series of contrasts—is less important than how their undoubted populism will lead them to react to the economic realities of the time: high commodity prices, macroeconomic stability but persistent inequality within society.
	I used to say when I lived in Peru that if I were a well educated Peruvian young woman instead of a well educated English young woman I would be on the left, even possibly a rather revolutionary left. No other approach seemed to me to be satisfactory given the problems that the country faced at that time. Now I say that one should redistribute the wealth that is coming from economic success into the poorer classes in Latin America, but make sure at the same time that someone is minding the money and managing the flow of cash so that it is not wasted or diverted into the wrong pockets or cut off by the foreign interests that own or manage much of the extraction which creates that wealth.
	If Latin American populism can be described—as it has been—as a bizarre blend of the inclusion of the excluded, macroeconomic folly and political staying power, it is the macroeconomic folly that needs to go. I hope and believe that there may still be a chance, albeit an outside one, that the next Peruvian president can successfully persuade the current manager of Peru's finances to stay on. If that happens, it will be an excellent omen for the country's future.
	I should like to mention one further item—the Chinese influence in South America. I shall do so very briefly. The Chinese are buying raw materials and selling back manufactured goods. What does that remind us of—the British Empire? In the same way, the value added came to us, not to the suppliers of the raw materials that we used. That is an economic danger of the influence of China over Latin American countries, particularly the ones which border the Pacific. I rather hope that the Peruvians, for example, will take decisions which will encourage and promote the refining of some of their minerals, thus creating greater added value and more jobs for the job-hungry populations on the coast.
	Lots of good things are happening in Peru. Huge efforts are being made to head off a possible AIDS epidemic. Peruvian organisations are working hard to address some of the damage done by growing coca in Amazonia, to ensure fair election processes, and to carry education to the people who live in the Andes or healthcare into the slums. But if the macroeconomic bit does not work, so much of that could be lost.

Viscount Waverley: My Lords, I wish to make two quick points before I come to my principal remarks. The decree by Bolivia's President Morales to nationalise the petroleum and natural gas operations is a blow to western interests, including that of British Gas.
	While sentiments of helping the poor are welcome if that is achieved with fiscal accountability—frankly, that would make a refreshing change to the situation elsewhere, where energy is the principal economic provider—the rule of commercial law must surely be respected. Will the Minister comment on that? Will he also say whether there is any suggestion that western interests did not cut a fair deal at the time of negotiation with the Bolivian Government for those assets? Does President Morales realise that there may be a freeze on foreign inward investment into his country?
	Secondly, I listened carefully to the noble Viscount, Lord Montgomery, and his underlying remarks vis-à-vis the United States. The manner by which the United States is conducting its policies for a new world order—and much of the detail is admirable—might be creating long-term global alienation and would leave us worse off than before. That would then be harder to put right than a positive drift to an equitable world.
	And so to Colombia. What happens in that country haunts us in the United Kingdom, or certainly should do. President Uribe's term will soon end. However, a ruling by the constitutional court is enabling him to throw his hat into the ring for a second time. He inherited a policy of ill-founded government land concessions for peace to Fuerzas Armadas Revolucionares de Colombia—FARC—which is the oldest and strongest guerrilla group in Colombia. It was a process of complete failure and was flawed from concept.
	Colombians gave their vote to Uribe, recognising that the guerrillas had played a double game; there were negotiations with the Government on the one hand and continued military training, kidnappings and attacks on small villages on the other. Uribe was mandated to end this by using the full force of the military. There is now a more stable political environment, with subversion and large-scale kidnappings reduced and the destroying of small villages and the blocking of main roads eliminated; many rebels have been killed, hundreds are in gaol and thousands have rejoined society and are now playing their part.
	FARC's leadership nevertheless remains intact. The opposition take this as indicative of Uribe's failure. The reality is far from that. The Plan Patriota had cornered FARC into the southern and most remote corner of Colombia. Recently however—flexing its muscles in the run-up to the presidential election of 28 May—it demonstrated its continued presence and capability elsewhere in the country.
	The second largest terror group, Ejercito de Liberacion Nacional de Colombia—ELN—has also been somewhat cornered by fighting three fronts: against the Government, paramilitaries and FARC, for territory and positioning in the cocaine trade. This has resulted in ELN being forced to enter negotiations with Uribe's government. All to the good.
	It is important for observers to understand the background. Colombian cocaine cartels in the worldwide narco-traffic were started by Pablo Escobar in the 1980s. This cancer has affected Colombian society at all levels, making the problem the engine of corruption and guerrilla violence. Colombia's most powerful cartel was formed after Escobar's death, with the unification of the guerrillas under the cartel of Medellin. The guerrillas offered protection to cocaine plantations and today have their own worldwide distribution network. Drug dealing and kidnapping are the basis of their finances. By the 1990s the guerrilla movement had shed its political and social ideology and solely adopted criminal activities.
	Against that backdrop, the Uribe administration have used the military with positive results, but as a further weapon and after a long-standing US demand—a pillar of co-operation between the two countries—Uribe used extradition as a persuasive tool against terrorists and drug barons. However, success in this long, drawn-out war can come about only with the co-operation of drug consuming countries. Uribe has been having considerable difficulties with the international community, for whom human rights violations are paramount and who are led to believe that the guerrillas still have idealistic motivations. Influential NGOs and foreign media, in particular, have exacerbated the situation with an unpragmatic and sometimes unbalanced overview. To that list can, with regret, be added certain Members of this Parliament in the UK.
	While some human rights cases do exist, they do so as a result of a war where civilians are used as a shield against the Colombian military forces. It is simply not plausible to condemn Colombian military forces in their entirety for those few cases, as in the same manner it is not just to condemn the entire US and UK military for occasional abuses in Iraq or elsewhere. FARC and other rebel organisations use the media machine to give Europeans a totally wrong image of this long conflict. I can tell the House that, for the first time in a very long time, Colombians can go about their day-to-day business, both in the principal cities and rural areas, knowing that a sense of security prevails.
	And what of UK government policy? My understanding is that an approach of constructive support exists, while not ignoring issues that cause concern. A balance between the two would appear to be correct, believing that there is more to be gained by offering support and advice than by remonstrating without offering solutions. That said, Colombia principally needs understanding from countries such as the UK—an understanding that can be achieved only by making a realistic analysis of the situation, an analysis that should be made from firsthand knowledge, not the spin of intermediaries.
	I would like to float a thought with the Minister. Would he support an Anglo-Colombian initiative from two universities—and I can think of one certainly, in Colombia, and so one from each country—to analyse and offer recommendations to end the violence and create an environment for peace? With that, you would have one of the most beautiful countries on Earth filled with people who can breathe freely.
	In conclusion, Colombia needs first and foremost understanding, fair international trade for its products and, above all, fair treatment.

Lord Giddens: My Lords, I, too, congratulate the noble Viscount on having initiated this debate. By that I mean a bit more than the ritual that one usually goes through—in my short time in your Lordships' House, this is the first time that I can recall on which there has been a debate on any aspect of Latin America. Given the importance of Latin America in the world community, this debate is only to be welcomed. As the noble Viscount said, Latin America is a big place and I will concentrate mainly on one small bit of it.
	Recently there were two elections very close to one another. In one country to which reference has been made several times, Bolivia, Evo Morales was elected. By the way, Bolivia is the third poorest country in Latin America. In Chile, which along with Mexico is the richest country in Latin America in terms of GDP, President Michelle Bachelet was elected. I will say some things about Chile and its implications for the rest of Latin America.
	Michelle Bachelet is Chile's first female president. In fact, she is the first female president in Latin America who was not married to a president before; so this is a notable breakthrough. I do not know whether any noble Lords heard President Bachelet's inaugural speech, which was quite charming. She said, "Who would have thought that someone like me—a woman; a mother of two children but separated from her partner; an agnostic—could have been elected in a country like Chile?". Indeed, who would have thought it? Chile is a male-dominated society, in which divorce was only legalised two years ago, and abortion is still illegal. One of President Bachelet's first acts was to introduce a 50:50 gender divide in her Cabinet and among the country's governors; that has not exactly happened in the UK.
	President Bachelet will continue the policies of her predecessor Ricardo Lagos, in my view quite rightly so. President Lagos had a 70 per cent approval rating when he stepped down, and with very good reason. It was President Lagos, before he was President Lagos, who on television pointed his finger at General Pinochet and said, "You promised you would not stand again in 1989. Are we to have eight more years of torture? Eight more years of oppression? Eight more years of human rights violations?". Many people thought that Mr Lagos would disappear overnight. Fortunately, he did not, and President Lagos did a marvellous job of handling the transition from Chile's fractured past to its seemingly stable present.
	Most noble Lords will know that there was a truth commission in Chile. Some 28,000 people who had been in prison, many of whom had been tortured, gave evidence at the truth commission. The result was a country kind of coming to terms with its past. Just before this debate, I was reading President Lagos's recent book, The 21st Century: A View from the South, where he says this nice thing: "no tomorrow without yesterday".
	Chile, as at least one other noble Lord has mentioned, has had consistent growth rates of up near 7 per cent over the past few years. Inflation is low; and one must remember that inflation was 27 per cent in the early 1990s. What is particularly remarkable is the drop in the poverty rate. Poverty was at 38.5 per cent in 1990, and it has dropped to 18.8 per cent in 2004. Chile looks like a European country in that respect. That poverty rate is lower than that of Italy and is about the same as that of the UK.
	Chile opened its markets, and that is the basis of its success. You cannot succeed in the modern world as a developing country if you do not embrace the wider world market. I do not say that one should embrace it in a na-ve fashion, because you must have the right institutions. But no country that has closed itself off from world markets has prospered. Only those countries that have successfully engaged with those markets have done well. Chile is often seen as a triumph of the so-called "Chicago boys", that is, free market philosophy, but it is not like that at all. Chile is now a social democratic country. President Lagos got a balance between an open economy and social policy. It is social policy that has improved the level of poverty; and it is social policy that has begun to establish the basis of a welfare state in Chile. Inward investment in Chile is much higher per head than it is in any other Latin American country.
	What lessons can be learnt? There are four lessons. First, you must have growth if you are going to leverage people out of poverty. The only way that we know of getting many people out of poverty is economic growth in which the poor participate. They do not always participate, especially in the history of Latin America. Secondly, you must have fiscal discipline, and I therefore approve of what President Lula is doing in Brazil. I wrote an article for a Brazilian newspaper saying that, and I got a whole host of hostile e-mails from the left, saying that he must spend more. As with President Kirchner in Argentina, you need fiscal prudence if you are to invest in growth. In both cases, they have managed to pay off a significant amount of their IMF loans, and so have saved quite a lot of money per year.
	The third lesson is the crucial importance of the empowerment of women. That is one of the main things holding Latin America back. There is a direct correlation between economic prosperity and the involvement of women in the labour force and in wider political systems across the world, whether in rich or poor countries. Chile is perhaps the first country where this will take effect in Latin America.
	Fourthly, you must conquer the problem of the state. The difficulty of economic development in Latin America is not markets; it is that the state is often over-bureaucratic, corrupt and over-extended. One worries when one sees President Morales send in the troops to nationalise industries as he did yesterday. Unless you reform the state, and run things to the state when it is corrupt, you will not get anywhere.
	An American vice-president who shall go nameless said, when he visited Latin America, that it,
	"is on an irreversible trend towards more freedom and democracy—but that could change".
	That is supposed to be a joke. He is also reputed to have said that he was surprised that people did not speak Latin down there, but that is probably apocryphal. Everyone is lobbing questions at the Minister and I will lob a couple, too. Do you believe that education can play a major role in promoting trade? I do, and we made a lot of effort at the LSE to expand our connections with Latin America. Secondly, are you prepared to spend more money on it?

Baroness Hooper: My Lords, my thanks also go to the noble Viscount, not only for his kind personal remarks but also for his splendid introduction. It is great to see him back on the red Benches. He still waved the flag, or flags, for the countries of Latin America during his gap period. Like him, I have spoken in numerous debates on Latin America, and one hates to be repetitious, even when many of the facts bear repetition. I fully support his concerns about the Foreign Office's restructuring and resources, as well as those raised by the noble Baroness, Lady Symons. I add, for the umpteenth time, that our cultural, historic and trading links with the region are of great value and importance and are well worth preserving.
	The Government's changed priorities and focus on the Far East and Middle East may be understandable, but we are missing a trick. It is interesting that China, our new great focus for trade and investment, is not missing it. The noble Baroness, Lady Thomas, has already referred to this. While we are pulling out of government-supported schemes, and the CBI is faithfully backing the Government's new trade priorities, China is moving in with investment as well as trade, and the political links that flow from the visits of the president of China and other senior government figures.
	First, Latin American countries are very much a part of the global village. Only this morning there was a reference on the radio to Latin American troops in Afghanistan. They also serve in Iraq, Cyprus and other parts of the world, under the blue helmets of the United Nations. Distinguished lawyers from Latin America function as judges and arbitrators in global institutions, and many individuals from the 19 countries of the region play valuable roles in the WTO, the World Bank and the IMF. As has been said, regional organisations such as NAFTA, Mercosur, and even the Andean community with its population of 130 million, have a significant impact on the world stage.
	Secondly, the region is rich in resources, as has already been said. My noble friend Lord Walker has already referred to agriculture and other primary products. Oil and gas have high visibility at the moment because of oil prices and the question marks over supplies from the Middle East and Russia, even before the new Bolivian president hit the headlines more recently. However, there are other valuable commodities and resources—chemicals, precious metals, and, above all, a resource of ever-increasing importance in our global world: water.
	After Canada, Venezuela has the second largest resources of sweet water in the world. Even little Paraguay exports water in bulk carriers to the Gulf. The Amazon River is known to many. It drains one-third of south America and is 10 times bigger than the next biggest river in the world, with all that that means for communications, fish supplies and irrigation. Iguac"u Falls, measuring one and a half miles across, is one of the widest and most beautiful waterfalls in the world. As well as being a tourist attraction, it is a source of energy and water. I trust that our policies will ensure that those countries preserve and conserve the very precious commodity of water which is so much lacked in other parts of the world. I trust your Lordships will agree that all of those points, as well as all that has been said by other noble Lords, illustrate that not only Latin America as a region but the individual countries in their own right, is a truly global player.
	Thirdly, democracy in Latin America, a subject which has already been touched on, is working and evolving, perhaps differently from other parts of the world. Recent events in Bolivia, for example, followed a proper constitutional process. Just over a year ago, when President Mesa was forced to resign and his next in line, the president of the Senate, Senator Vaca Diez, was also unable to take up the post, President Eduardo Rodriguez, president of the Supreme Court, took over as interim president. He presided over the country for the period leading to elections, which took place at the proper time and with international observers and produced a conclusive result. That is very good news.
	If democracy is producing leaders who are more representative of the indigenous people and who seek to distribute more evenly the wealth that exists, we should all welcome it. In that context, the British branch of the Inter-Parliamentary Union (IPU) is playing a very full part in establishing good parliamentary relations between Latin American countries and ourselves. I was fortunate to go on a visit to central America. The noble Baroness, Lady Thomas, recently went to Peru. We are due to have a visit from Venezuelan parliamentarians shortly. Colombian parliamentarians were here late last year. That is all good news. The All-Party Group on Latin America, to which the noble Viscount referred, is also doing a terrific job.
	I am delighted that President Chavez of Venezuela will visit London again in the near future. I hope that President Morales of Bolivia will also be invited, especially in view of British interests in oil and gas industries, which we hope will survive the current scenario. Mention has already been made of the very successful visit of President Lula. I should also like to point to the recent visit of President Fernandez of the Dominican Republic. It is one of the smallest Latin America countries, but on that visit many new business relationships and commercial opportunities were forged. So there is and has been plenty of action and activity.
	There is also much more to be said, for example, about educational links, the downsizing of British Council operations, the reduction in Chevening scholarships, environmental issues and DfID's role not just in the closure of the Peru project but in all its work in central America. As other noble Lords have said, a bright spot in all this is the enthusiasm and interest of Ministers such as the noble Lord, Lord Triesman, from whom we will be hearing, and his colleague at DfID, Gareth Thomas.
	I finish by saying that I had always hoped that the United Kingdom, because of its special relationship which the noble Viscount outlined at the outset, should be a bridge between Europe and Latin America. I hope that the Minister will be able to reassure us that together with Spain and Portugal we shall continue to build that bridge with all the enthusiasm and resources we can muster.

Lord Thomas of Swynnerton: My Lords, the House of Lords has changed a good deal recently, but there is one activity that has not changed: the dedication of my noble kinsman Lord Montgomery of Alamein in sponsoring debates on Latin America. These debates have been a landmark throughout a generation. It is true that during the unfortunate interregnum when my noble kinsman Lord Montgomery was not here with us, for reasons that I have forgotten, the noble Baroness, Lady Hooper, kept the flag flying admirably.
	I have been taking part in my noble kinsman's debates for about a quarter of a century. What has happened in those 25 years? First, it is worth emphasising an obvious point—obvious points are often not noticed: that Latin America continues to be a continent where inter-state wars rarely occur. That is a remarkable difference from all other continents, Europe included. Perhaps that is why the media, which is interested in catastrophe more than benign developments, does not take much of an interest in Latin America.
	Secondly, most of the civil wars that stained activity in Latin America a generation or so ago have ended. It is now over 40 years since the late Lord Harlech commented to President Kennedy in relation to the civil wars in central America, "Well, I don't see why they shouldn't have their own Wars of the Roses". Most Latin American countries have established peaceable settlements of one kind or another. I was very interested in what the noble Baroness, Lady Thomas of Walliswood, said about Peru and also in the impressive remarks made by my noble friend Lord Waverley about Colombia.
	Many of the wars in central America were stoked by Cuba, but since the end of the Cold War Castro has had more to deal with at home and so there have been no such activities. It is worth while mentioning those civil wars of Latin America because they were immensely destructive. They brought no contribution of any positive nature to the countries concerned and ruined a generation of progressive people. With the exception of Colombia it is probably true to say that civil wars are not presently under way, which is a great change, although Colombia is still a great tragedy, as the murder last week of the sister of ex-President Gaviria for unknown reasons, but surely political ones, reminds us.
	Latin America is after all a continent with fairly good interrelations between the peoples who make up the states and nations concerned; for example, Mexico. Mexico is a country where in addition to the mixed and Spanish sections of the population there are about 50 peoples speaking mutually unintelligible languages. That does not mean that they are going to go to war with each other: the Maya are not going to attack the Mixtecs. Perhaps it would be a good thing for the European Union to send out a study mission composed of Basques, Irishmen, Serbs and Flemings to discover the secret of tranquillity in Oaxaca.
	The main development of the last generation, as the noble Baroness, Lady Hooper, mentioned, has been the development of democracy almost everywhere. My noble kinsman did not touch upon this as deeply as he might have done, but all Latin American countries unfortunately have their democracies geared towards a strong executive president, as France and the United States do, and not to the parliamentary system that the mother country—Spain—and we have. Perhaps that is something that the Inter-Parliamentary Union could investigate, if there is any chance of constitutional change in any of those countries.
	Democracy occasionally throws up leaders with whom we are uneasy. Chavez is one and Morales is another. Humala may be another, and who knows what will happen in Mexico with Lopez Obrador. But that is the way of democracies: some leaders emerge who do not play the game in the way that it used to be played.
	The democratic changes are especially impressive in Mexico. In the past, there has been a great number of major changes in that country—the conquest, independence from Spain and the revolution—that were characterised by colossal death rolls. But the present series of changes has not been marked by them. There are three strong candidates contesting the presidency on 6 July, and one of them will emerge as a fairly elected president of Mexico, whatever happens to him afterwards. What a change that is from the old days of the so-called "alchemy" when the election was always rigged to return a candidate from the ruling party, the PRI. In the past, if one ventured to suggest that there might be a fair election in Mexico, many intelligent Mexicans would say, "But my dear boy, if we had a fair election here it would be won by a priest, a singer or a bullfighter".
	I have a moment in which I can mention Cuba. Cuba still suffers under the autocratic communism set up by Castro nearly 50 years ago. Its government shows no capacity or interest in making a plan for that beautiful country and those enchanting people to have a clear, free future. When Castro dies, there will undoubtedly be difficult moments. I pray that the changes that will then come will be allowed to evolve from within Cuba, rather than be imposed from without by, for example, the United States, whose mistakes in the remote past—as it now seems—before 1959, were largely responsible for the emergence of Castro in the first place.

Lord Howarth of Newport: My Lords, it is a privilege to follow the noble Lord, Lord Thomas, whose depth of historical knowledge of Latin America is unparalleled. I add my thanks and congratulations to the noble Viscount, Lord Montgomery, for providing us with the opportunity for this debate. He spoke with all the authority of a lifetime's work and engagement with Latin America.
	I add my voice to those that have argued that it is essential that the United Kingdom remains fully engaged with Latin America—diplomatically in terms of power politics and economically—and continues to make the contribution that we can to environmental and social progress in Latin America.
	We have seen the closure of some embassies, notwithstanding the fact that the Foreign Office provides remarkable value for money. The British Council has been engaged in some retrenchment and DfID is reviewing its regional assistance programme. DfID categorises nearly all the states of Latin America as middle-income countries but that bland terminology ignores the extreme inequality that persists in Latin America. The corollary of extreme inequality is extreme poverty. Earlier this week, Bob Blizzard who admirably chairs the All-Party Parliamentary British-Latin American Group, of which I have the privilege to be an officer, told the other place in a debate that 57 million people in Latin America live on less than $1 a day and 132 million people live on less than $2 a day. NGOs, including British-based ones, do remarkable work in assisting social progress but I would contend that the Government cannot avert their gaze, not least with the commitments that they have rightly made to the millennium development goals.
	In truth, Latin America needs not so much cash help as technical assistance to enable its countries to play their part and thrive in a global, knowledge-based economy. Because of the population balance, Latin America is a young continent, so there are important opportunities for educational links with our colleges and universities. The noble Lord, Lord Giddens, alluded to this.
	The growth of the Latin American economies has been and is impressive. As has been said, this is important in a whole variety of ways, not least because of their role as commodity providers. There is impressive growth in many countries and, of course, we have recently become vividly aware of the economic performance, potential and power of Brazil. It was deeply pleasing to hear the speech that President Lula made at the Mansion House and to hear the response of the City of London to what he proposed.
	While there is impressive growth in many Latin American countries, it has not yet led to discernible poverty reduction in all too many of them. It is in our interests as well as theirs to play our part in developing relations, including trade. It is also in our interests to encourage and help the countries of Latin America to achieve environmental sustainability.
	Equally, it is in our self-interest to play a very constructive part in relation to the problem of drugs. When I was, until a year ago, a Member of Parliament for Newport, I was painfully aware of the activities of yardie gangs who, having saturated the markets in Bristol and Birmingham, turned their attention to Newport. About three years ago, I had the opportunity to visit Key West, which is the base of operations for the combined United States and United Kingdom international and inter-agency drive to interdict drugs traffic. The intelligence-led operations are of great sophistication and are a model of collaboration, but they were grievously under-resourced and, indeed, became more so when resources had to be diverted to Iraq. I hope that the Minister will be able to say that there is a determination to continue to invest what resources we can in this extraordinarily important work of ensuring that the drugs that emanate from Latin America and transit across the Caribbean are not able to proceed further in our direction.
	I hear that SOCA is to withdraw drugs liaison officers from Peru. If that is the case, I believe that it will be an error of judgment. Crop eradication in Colombia has recently been almost matched by extensive planting. There is increased production in Peru, Ecuador and Bolivia; there is processing in Argentina and in many countries in south America. Between 1981 and 2001, the United States spent £8.57 billion on international narcotics control, mostly in Latin America, yet estimated production in south America during that period rose from 150 tonnes to 870 tonnes and the price halved. We now see US budgets for that purpose falling, the war on drugs apparently being lost and the will to fight it attenuating. We have just heard that Mexico has decriminalised personal drugs use, a policy that will no doubt add to the difficulty of the relationship between illegal Latin American immigrants in the US and others in that country.
	Are we to give up? We could of course go down the same route of decriminalisation as the Portuguese have done—as far as I know, the end of the world has not occurred in Portugal—but if that is not to be our policy, we must renew our work. That is extraordinarily important for our own communities.
	As the noble Lord, Lord Thomas, told us, the progress of democracy in Latin America has been remarkable, in contrast, sadly, to what has been seen in Africa. Although I would not wish us to abandon Africa, should we not also, however, be backing success in Latin America? Twenty years ago and more, the governments of Latin America were all too often authoritarian regimes. They failed to deliver the promises of reform that they made when they came to power. There were civil wars, military coups and border conflicts. In Colombia there was the drugs cartel and, effectively, two armed governments facing each other. Then there was the debt crisis and the terrible fall in living standards that followed. The turnaround has been extraordinary. We have seen revived democracy in Uruguay and Chile, and, as the noble Lord, Lord Giddens, told us, against the historical and cultural background of Chile the election of President Bachelet is a remarkable event.
	There is democracy now in countries previously without that tradition: Paraguay, Bolivia and many of the countries of central America. Changes of government have been handled peacefully. Mexico has moved from being a one-party state to a multi-party democracy. But democracy in Latin America still needs support. It takes time and intelligent effort to develop democracy. We should offer our experience in helping states to develop their administrative capacity, improve accountability in their institutions of representative government, including political parties, and ensure that governance is good and the judiciary incorrupt. Deepened democracy will make possible sustained and equitable growth and fiscal stability will help to relieve endemic poverty.
	We, in particular, need to be there. Unfortunately, the Americans are unpopular in the region, as President Bush recently found in Argentina. There are bitter memories of United States intervention in Guatemala, Nicaragua and El Salvador. I believe, although I would not expect the Minister to comment, that there is a poor quality of analysis by the State Department. It is curious that they allow themselves to be so nettled by President Chavez. We can take a cooler and more pragmatic view. As the noble Lord, Lord Walker, reminded us, China is highly energetic in the region. Britain, with and through the European Union, must remain fully committed in Latin America, for ethical, commercial and strategic reasons. Of course it is a problem to spread ourselves everywhere but it would be a huge missed opportunity if we neglected Latin America.

Lord Luke: My Lords, I, too, congratulate the noble Viscount on securing this debate. However, I am very sorry that he referred to the area as Latin America, as I believe that one reason we in this country focus so seldom on that part of the world is that we use that all-embracing and rather misleading term and the term "the Americas", which is even more so. I always prefer to refer to the USA, Canada and Mexico when talking about north America, and when talking about points south I prefer to refer to central America and south America, because the focus thus becomes much more closely aligned to what one is talking about.
	South and central America together make one of the most important developing regions of the world, one that after a somewhat chequered history is starting to stumble to its feet, with increasing political stability working hand in hand with growing economies. We saw the flexing of some of its muscle during the Cancun trade round. Overall, as this debate has shown, this region of the world is very much on the up, although, admittedly, not without difficulties—some of them not unconnected with Left-leaning governments.
	The country on which I would like concentrate my comments is Argentina. I knew it well between 1955, when I witnessed the removal of a particularly corrupt and oppressive dictatorship, and 1971. I have followed with great interest the fluctuating fortunes of Argentina ever since. During the debate of my noble friend Lady Hooper last year, I commented that Argentina,
	"always seems to be able to pull out of its difficulties".—[Official Report, 26/5/05; col. 634.]
	It is interesting to compare her situation now to that of last year. Then there had been a massive restructuring of Argentina's debt, creditors had to accept a cut in principal, a lengthening of maturity and a reduction in payment of interest. As we all know, this followed an economic fall from grace in 2002, when Argentina went from a country widely held up as a model of successful free market reform to one that defaulted on its public debt of some $155 billion.
	However, during the past three years there has been an annual growth in the economy at an average of roughly 9 per cent, reaching 9.2 per cent in 2005—the fastest rate for 13 years, with forecasts for this year expecting that growth to continue. January's figures show that it was the 38th consecutive month of constructive growth, with industrial activity and tax collection percentages rising and unemployment figures starting to decline. The start of this year has also witnessed President Kirchner paying off in full the IMF loan of some $12.5 billion agreed in 2003.
	With no further defaults since 2002, investors in Argentina's debt have started to receive benefits from the GDP warrant scheme, which last year decoupled warrants from the bonds issued, enabling the warrants to be traded independently on the secondary market. These warrants mean that in any year when the economy grows faster than expected, creditors will receive 5 per cent of the difference between the size of GDP in that year and that predicted by the prospectus.
	It sounds a convincing catalogue of progress. However, as usual, a degree of uncertainty hovers not far behind and there are increasing concerns regarding the control of inflation. The president has opted to keep growth going at all costs rather than having to raise real interest rates or to allow the currency to appreciate to damp down inflation. Instead, he has sought "voluntary" price freezes from retailers in the hope that they will keep inflationary expectations in check while he tightens fiscal policy. Consumer prices rose by some 12.3 per cent last year, causing unrest—naturally—in labour unions whose disruptive demands could, as one commentator put it,
	"throw a spanner into the President's strategy".
	An unprecedented measure was announced in March in an attempt to address inflationary pressures—a near-total ban on beef exports, with the aim of flooding the national market for six months and making beef more affordable to ordinary Argentines. Naturally, meat industry observers fear that the export market will be badly damaged and that prices in the politically sensitive home market will, after initial falls, start to climb inexorably as farmers switch to alternative crops—quite apart from the eventual effect on the balance of payments.
	Can the Minister update the House on the plight of the isolated communities in the mountains of Salta, Jujuy and Formosa, where an estimated 3, 000 to 6,000 people have been affected by flooding and landslides in the past few months? What resources have Her Majesty's Government provided to help food and medical supplies to reach these cut-off communities where there is a high level of need?
	I could not make a speech about Argentina without mentioning the Falkland Islands. In 1990, eight years after the Falklands conflict, diplomatic relations between the UK and Argentina were restored. There is now a sovereignty umbrella arrangement whereby both countries can respect each other's position on sovereignty while allowing them to resolve common interests such as fisheries and mineral deposits. Indeed, there have been very recent tensions over fishing rights, and Argentina recently impounded a British trawler in a dispute over squid-fishing. It is believed that squid is being used as a sovereignty tool over the Falklands. Can the Minister explain what has happened, how the situation has been resolved—if it has been—and whether it was simply yet another example of sabre-rattling for home consumption to show how macho the president is?
	I am very fond of Argentina and wish it well on its road to recovery. It is a part of the world where we need to support and encourage good governance, democracy and the rule of law. Argentina has enormous advantages, and is a very attractive and varied country that stretches from the freezing and windy Tierra del Fuego—I have been there, so I know how windy it is—to the tropical forests of the north. I strongly recommend it to your Lordships if they are thinking of paying it a visit.
	Finally, I shall make one small point about the new president of Chile, to whom noble Lords have referred. I remind your Lordships that there was a very feisty lady in the 19th century called Madame Lynch, who, as president of Paraguay, conducted a war against Brazil, Argentina and, I think, Bolivia, all at the same time, and lost.

Lord Brennan: My Lords, the Latin American world is undergoing a process that involves politics, poverty and economic advance, each one a tension with the others, to which we should pay great attention. The International Monetary Fund reviewed the Latin American economy last week, and the general picture is that it is doing better than expected in making political progress and economic advances and in reducing poverty, as well as in making progress in employment and developing macroeconomic policies and the like. But, with that promising conclusion, the IMF issued a very strict warning which I propose to develop as follows.
	Such promising economic progress in most countries is sustained by high commodity prices and a surge in demand. It is very dangerous indeed for the Latin American continent to build its economic future on that base. But when we look at politics, poverty and economics in Latin America, as I will now do with that warning in mind, what do we find? There is this logic: the nation's national resources equal the nation's wealth, which equals the means of reducing the nation's poverty, which equals the need to nationalise. It is the logic of leaders who have been elected in a number of South American countries in the recent past, and we must recognise it whether we agree with it or not. In 1938, Mexico nationalised its energy industry, which now enjoys a quasi-constitutional position in the life of that country. Thus recognising the realities, let us take Bolivia as an example.
	Bolivia has the second highest gas reserves in South America, and is the poorest country in South America by a long way. In 2004, in a national referendum, 95 per cent of Bolivians voted for the nationalisation of their energy resources. In 2005, a hydrocarbons law upped the return on royalties and tax to 50 per cent. Last Monday, nationalisation was imposed by government decree. That is not progress carried out by those indifferent to the national will, but by people responding to it—at least, in terms of nationalising resources. Few of us would know that in many South American constitutions the natural resources of the country in question are regarded as belonging to that nation and inalienable in that ownership. So, realistically, we should accept that in a country such as Bolivia these changes are the result of popular forces.
	In pursuing nationalisation, Bolivia, Ecuador and other countries seek a return on their own resources—the quid pro quo of the nation in relation to the investor. Ecuador imposed a 50 per cent windfall tax last month, while Venezuela has renegotiated all of its energy contracts with foreign investors. We know what happened in Bolivia. Whether we like it or not, the Latin American world is changing. During that change, is it not important for both the nation and the investment community to keep a sense of balance? Yesterday in the Financial Times, the editorial comment on Bolivia said quite plainly that,
	"there is nothing intrinsically wrong in trying to maximise tax and royalties"
	for your country. On the other hand, when we think of the political leaders of South America, we ought perhaps to remember Adlai Stevenson, who said:
	"Patriotism is not short, frenzied outbursts of emotion but the tranquil and steady dedication of a lifetime".
	Political change may at times be dramatic, but thereafter it has to be considered and prudent, and will sometimes take a long time.
	So, what are the prospects if the balance is to be kept in South America? The Morales victory is only the second occasion in several hundred years when an indigenous Indian became the president of a country in Latin America, the first being Benito Juárez. That is an astonishing rarity of success from what was the majority of the population. In Bolivia, this indigenous leader—faced with the national will which I have described—is selling Brazil 50 per cent of its needs in gas, which provides one-third of Bolivia's tax returns. There is no doubt that there will be a solution.
	I have looked at the decree of last Monday. It is only three pages long and has nine short articles. One would have thought that it was drafted with flexibility in mind, as negotiations start now in the 180 days which have been given to investors to renegotiate. For Brazil, Lula has responded with prudence and care, so there are good prospects.
	However, the net result of all this is that the poor of Latin America have spoken and their leaders have responded with passion, which we should meet with patience. We do so through the present Minister, my noble friend Lord Triesman, of whom I ask nothing save a promise that he continues to give the same level of intellectual enthusiasm, commitment and friendship toward Latin America that he has shown since taking office. His efforts will be matched throughout by those of the noble Viscount, Lord Montgomery, whose persistence is outdone only by his persuasion and utter determination that we will never forget Latin America. We should not, as its nations' destinies are linked with ours and we should look to it more than we do.

Lord Rea: My Lords, the noble Viscount, Lord Montgomery, has chosen an exciting time to discuss Latin America. He has also managed to bring what may be only a short burst of Latin American weather with him, which is rather nice. My credentials for joining the discussion are modest. I am only an emergency Spanish speaker, but I have over the years made five journeys to Latin America and visited 10 countries, including an IPU visit to Cuba.
	My chief lasting impression of Latin America is of the stoical, poverty stricken but dignified and colourfully dressed indigenous people of the Andean region. Since the Spanish conquest in the 16th century, they have been treated as second-class citizens even where they form the majority of the population. There is still a persistent socio-economic hierarchy, with a small minority of direct descendants of the Conquistadores at the top—although their influence is diminishing—followed by "mestizos" of varying degrees of ethnic mix, with the fully indigenous people at the bottom. That is of course an oversimplification, but the parallel with South Africa and other settler-dominated countries is clear.
	However, as almost all noble Lords have said, the political power structure is changing. In the past decade or so, government by military coup, which was the norm, has been replaced by government through the ballot box, although attempted coups have continued—the habit dies hard. However, so far, the change to more stable democratically-elected governments has not brought about much improvement in the lives of the less well off, and disillusion about democracy was until recently widespread.
	Great inequality of wealth has persisted, although the region as a whole—as many noble Lords have said—is doing well economically, with oil and commodity prices at a high level. Small wonder then that Left-leaning governments with indigenous leaders and radical pro-poor policies—including re-nationalisation of energy sources—are increasingly being elected. When President Morales of Bolivia surprised the world three days ago by sending the army to take control of the gas industry, he was actually carrying out the programme on which he was elected by 55 per cent of voters, and, as my noble friend Lord Brennan pointed out, quite a lot of the other 45 per cent of voters were also in favour of this action. In fact, this was not an outright expropriation; the Bolivian Government are acquiring only a 51 per cent share in the industry and will pay for this—though the price has yet to be determined by negotiation over the next 180 days.
	The surprise in Latin America is that the Left-wing governments of Venezuela and Bolivia have, so far at least, not been overthrown by coups or other methods organised by the CIA as has occurred repeatedly in the past, when any government a shade Left-of-centre were elected. In fact, an attempted coup did take place in Caracas in 2002, but was a signal failure because the army and a large number of the people remained loyal to President Chavez—even though he is accused of being a populist demagogue. There have been many events in the past half century, perhaps as many as 40, in which a Left-of-centre government have been overthrown in Latin America; the best known being Chile and Nicaragua.
	There are of course more subtle ways of destabilising and eventually toppling Left-leaning governments who may be unpopular with certain powers in North America, such as economic squeezing. President Lula of Brazil lost some of his popularity because the financial strictures required by the international financial institutions caused economic hardship and prevented him carrying out some of the poverty reduction programmes that he and his party had intended. However, in a delicate balancing act, he succeeded in allowing many of these programmes to go ahead—a few, I am glad to say, have indirect assistance from DfID. President Lula retains popular support.
	I hope that my noble friend will have time to outline the nature of development assistance that we are still providing to alleviate poverty in Latin America. He knows that, although direct bilateral aid has been withdrawn because of the middle-income status of Latin American countries, there is still extreme poverty in most of them, as Bob Blizzard pointed on Monday in Westminster Hall. Some excellent work, funded by DfID, had to be curtailed after the decision to concentrate aid on countries classified as poor. I do not need to go further on this matter; other noble Lords have discussed it.
	The enormous advantage for the new wave of Left-wing regimes is that the leading nation among them, Venezuela, has vast oil wealth. It is heavy oil, which is more expensive to refine, but with world oil prices set high, that problem is less important. This enables Chavez to assist and encourage like-minded governments and presidential candidates such as Ollana Humala of Peru. This was the cause of a bad-tempered spat between thee two countries, resulting in the withdrawal of the Peruvian ambassador from Caracas. Chavez says a lot, as we have heard, and he does not mince his words, particularly about President Bush or even our Prime Minister, whom he has called a "pawn of imperialism" after the Prime Minister rather patronisingly said in another place that Venezuela should "abide by the rules of the international community", although he had not broken any. As has been mentioned, Chavez has developed a close relationship with Cuba and supplies it with subsidised oil. In return, Cuba is sending thousands of doctors to help set up and run health clinics in villages and barrios in Venezuela which previously had none. Cuba trains a surplus of doctors. In this respect, Cuba is rather like Scotland, which for many years exported doctors, plus engineers and whisky, while Cuba exports doctors, plus cigars and rum.
	In the past few days, a new trade agreement has been signed between Cuba, Bolivia and Venezuela. It is known as ALBA—which is Spanish for "dawn"—Alternativo por las Bolivianos. This is being promoted as a socialist alternative to the Washington-backed Free Trade Area of the Americas. It contains clauses covering such matters as working towards the elimination of illiteracy and the expansion of employment.
	I see no reason why British firms should not maintain or increase their investment in the new Left-leaning governments of Latin America. It is badly needed by the countries concerned. The terms offered may result in a reduced share of profits for investing countries when compared with prevailing or former high rates, but I am sure that fair profit margins will still be negotiable Almost every country in Latin America has a positive trade balance with the UK, so British exports should be welcome, whichever department of state promotes them. There are many British products of high quality for which we have historically built up a good reputation in Latin America. In particular, there is a huge need for expertise and training in a range of scientific, medical and other academic skills. I suggest that we are in a better position to provide them than China. I am sure that my noble friend will comment on this area.
	I had intended to say a few words about the illegal drugs trade, but I see that my time is up. The matter has in any case been covered fairly fully by other noble Lords.

Lord Roper: My Lords, I congratulate the noble Viscount on having persuaded the Convenor to include this debate in our proceedings and thank him for his helpful introductory speech. As the two previous speakers said, the debate is topical in view of the troubling events of this week. Latin America has probably had more column inches devoted to it in the British press than for a considerable time.
	This remarkable debate has as usual shown the range and depth of knowledge in this House. I am rather embarrassed by my relative lack of expertise compared with those who have spoken. I am a relative neophyte. My personal interest in, and knowledge of, Latin America was very much enhanced by participation in an IPU visit to Uruguay and Argentina at the end of last year. I agree with what the noble Baroness, Lady Hooper, said about the importance of the IPU and with the suggestions made about how the links with the IPU might perhaps be developed as methods of assisting democracy.
	Events in Bolivia this week have shown that of the two largest foreign companies producing natural gas in Bolivia one is Brazilian and the other is Spanish. The focus of the political and economic relations of Latin American countries is no longer overwhelmingly with the United States, but increasingly with other Latin American countries, with Spain—the foreign direct investment of which is growing enormously in many of the countries—and, as was said by the noble Lord, Lord Walker, with the developing role of China.
	The higher world prices for oil, metals and other commodities have been enormously advantageous to Latin America in recent years. Whereas five years ago the region had an overall deficit in overseas trade of $44 billion, last year it had a surplus of $37 billion. That swing in the region's overseas trade and the prices earned for its exports have given those rather significant growth figures already referred to in the cases of Chile, Argentina and a number of other countries. I was able to see that when I was in Argentina and Uruguay.
	The sad thing is that in spite of this significant increase in GDP in recent years, there is still little progress in tackling the acute poverty and inequality, which continue to be widely considered as the major problems facing the countries of the continent. The possible exception is Chile—I very much agree with the remarks of the noble Lord, Lord Giddens—where social policy has been built on to a liberal economy. Indeed, the liberal economy now means an effective society with the introduction of the recent social policies.
	Over the past 15 to 20 years Latin America has seen in almost every country deep economic reforms, following fairly rigorous neo-liberal policies, sometimes introduced without very much attention to their implications. This can be seen in particular by the privatisation of utilities, leading to investment by European and American companies in many places. Unfortunately, as Professor Ricardo Ffrench-Davis, the senior adviser to the Economic Commission for Latin America and the Caribbean, reports in his recent book:
	"Although these reforms have made some progress possible, their impacts on growth and equity have also brought disillusionment".
	In spite of the recent economic growth, average real wages in 2005 were lower than in 1980, taking Latin America as a whole. The number living in poverty, according to some calculations, was higher. Attempts to reduce fiscal deficits have meant reduced spending on roads and physical expenditure and on health and education. As a number of noble Lords have said, some of the recent swing to the left in elections in Latin America has no doubt been influenced by these trends.
	Another disappointment has been the slow and sluggish development of the institutions of regional integration, referred to by the noble Lord, Lord Walker. The creation of Mercosur in 1991 was something of which much was expected as a method of integrating the countries and also as a useful partner for the European Union. It was intended to provide for the southern cone a basis for economic and political union comparable to that of the EU.
	I have been puzzled by this for some time, so when I was in Montevideo last year I visited the headquarters. I discovered that in spite of the aspirations for Mercosur, there were very many obstacles to its effective growth. There is an asymmetry; Brazil and Argentina are so much bigger than Uruguay and Paraguay. There is limited interaction in trade between the members; only 10 per cent of Brazil's foreign trade is with other members of Mercosur. There is a lack of commitment within the member states; Mercosur tends to be an instrument of foreign policy, being dealt with by the president and foreign ministries, rather than the economic and commercial ministries. As the noble Lord, Lord Walker, pointed out, there is no Commission; there is a limited technical secretariat—120 people are employed by Mercosur, which is not much of a basis for developing an effective institution. There are also considerable membership ambiguities. If you had read the press last December, you would have got the impression that Venezuela had been admitted. That is not the case. It has to detach itself from the Andean community before it can join Mercosur. The people I spoke to said that it would take a further five years. Bolivia was supposed to have started negotiations in December.
	However, all of those existing structures are obviously affected by the announcement—to which reference was made by the noble Lord, Lord Rea—in Havana of the "Bolivarian Alternative for the Americas". It is by no means clear what that will mean in future and certainly makes it very difficult for the European Union, which I do not believe will be able at Vienna to make any progress on its negotiations with Mercosur for a proper trade agreement. Indeed, as the noble Baroness, Lady Symons, suggested, we may need to look for bilateral arrangements rather than trying to do something comprehensively, in the same way that the Americans have moved away from the FTAA towards a series of bilateral free trade areas.
	One of the most positive developments of the past 20 years has been the movement away from authoritarian rule to democracy. But it is one thing to have elections, it is another thing to have effective democracies with effective relations between the executive and the legislature, effective civil services and an effective rule of law. There is still a great deal to be done in some of the countries to make the institutions of democracy work.
	A recent report of the United Nations development project talked about developing a concept of social citizenship, including efforts to combat poverty and inequality, or people might get rather tired of democracy. In this respect I ask the Minister, whose enthusiasm for his work in this area I recognise and admire, as has been said by so many other noble Lords, what plans the Government have for the Chevening fellowships. They have been extremely important as a way of bringing to Britain young people who are likely to take on responsibilities in the countries of Latin America. At a lunch at the embassy when I was in Buenos Aires I met some people who had been Chevening fellows and I realised what an investment that sort of thing was. I hope that stories that they are being cut or reduced are exaggerated.
	However, we need to do more. I was interested to discover that the German Foreign Minister is making a visit to some Latin American countries this week. Germany is not a country among our partners that one would have thought had a significant interest in Latin America. I refer to ministerial visits at all levels, not only those carried out extremely effectively by the noble Lord, Lord Triesman, and to the building up and extension of the work of the British Council. I am glad that the noble Lord, Lord Kinnock, was present for part of our debate and I hope that he caught the enthusiasm which we have for its work.
	We also need to find ways to develop our links. I was surprised to find in both Montevideo and Buenos Aires the great friendship there is in those countries for Britain. There is a potential for co-operation and they are in many ways our natural allies in economics and politics.
	I once again thank the noble Viscount, Lord Montgomery, for giving us the opportunity to have this most useful debate.

Baroness Rawlings: My Lords, I too would like to congratulate the noble Viscount, Lord Montgomery, on securing this very interesting debate. I agree with my noble friends Lord Walker and Lady Hooper that it is grand to see him back in the House and championing Latin American causes so eloquently.
	This debate coincides today with Bolivia's talks with Brazil, Argentina and Venezuela, in Argentina, to discuss its move to extend state control over its natural gas assets. As many of your Lordships have highlighted today, the recent electoral victories are seen as forming part of a seamless web of leftism spreading throughout the southern and central American countries.
	While the new leaders' policies vary in terms of political ideology, on the whole they are all linked to a strong populism tradition, one major common thread being that of nationalism. This has been aptly demonstrated by Bolivia's 100-day old president, Evo Morales, who ordered the military to seize the natural gas fields controlled by foreign investors over the weekend. This follows in the wake of similar moves by Venezuela's government, led by President Hugo Chavez in early April. It is of significant importance in the context of today's fragile energy climate. As we heard, Bolivia has the second largest reserves of natural gas in the region. We forget at our peril that energy demands and economic development go hand in hand with political stability. This was stressed by the noble Baroness, Lady Symons.
	The Bolivian leader has said that private energy companies will have to review their contracts, selling their controlling stakes in energy to his government. During that time, the government say they will carry out audits of each company to determine how much they should pay for a stake of at least 51 per cent in each. It may not have alarmed several of your Lordships who have spoken here today, but the move has definitely alarmed Brazil and other key foreign investors. With Brazil relying on Bolivia for half of its gas, stakes will be high when they meet—especially as its state-owned energy company Petrobras is the biggest investor in Bolivia's gas fields.
	Speaking recently, Bolivia's Left-wing president, Mr Morales, said:
	"The pillage of our natural resources by foreign companies is over".
	He also said that the gas fields were,
	"just the beginning, because tomorrow it will be the mines, the forest resources and the land".
	That is heady rhetoric, bearing in mind that the fate of Bolivia's gas reserves was at the heart of protests which saw two previous presidents thrown out of office.
	I am afraid that I cannot agree with the argument made by the noble Lords, Lord Brennan and Lord Rea, in favour of nationalisation. Today is not the place or time to pursue it, but I look forward to another occasion when we can discuss it. Can the Minister inform the House what assessment the Government have made of the evolving situation in Bolivia and how that may affect regionalism moves in the easternmost provinces? What steps have Her Majesty's Government taken to try to promote good governance in both Bolivia and the region as a whole?
	There is further concern that arises from the events at the weekend, namely the growing influence that President Chavez appears to have over the new Bolivian president who, among other things, is against open trade and regional integration. Such principles go against the very core of what Mercosur is trying to achieve in the creation of a common market and customs union between Argentina, Brazil, Paraguay, Uruguay and now Venezuela. What assessment have the Government made of the effect of the new "people's trade bloc" agreement between Cuba, Venezuela and Bolivia? How do they think this will work with regard to the aims of Mercosur?
	I would also be interested to hear the Minister's comments on Venezuela's nuclear ambition a year on, considering recent events. Following the question raised by the noble Baroness, Lady Symons, can the Minister update us on the current meetings of the recent WTO that started this week, following reports in the press on Monday that ambassadors from the WTO member countries are increasingly concerned that talks are headed for failure?
	During my noble friend Lady Hooper's debate last year I reiterated comments from the BBC that Brazil was,
	"a gentle giant awakening, despite its continuing problems".—[Official Report, 26/5/05; col. 639.]
	There can be no doubt that President Lula has made an impact. Following his predecessor's policies with regard to IMF targets and fiscal discipline, he has not just worked on slow and steady economic stability but also on social progress, inequality and poverty alleviation.
	I hope that the Minister can inform the House how the Government can maintain a balance of keeping the pressure on Brazil to tackle its remaining problems while supporting its move to play a greater international role through its dynamic economy and its position as a weighty power, not only within the region but in the world.
	It would be impossible to have this debate without mentioning the importance of Mexico and its influence on the group of countries who are balanced on an interdependent knife-edge where lawlessness, particularly drug-related crime, national debt, poverty and social inequality in one can easily overspill into another. There are vitally important presidential elections on 2 July, which could have a serious knock-on effect on the country's successful economy and its position as a stable pillar of democracy in a troubled region.
	I have had time to pick out but a few of the countries discussed today, although the issues, both positive and negative, flow throughout the continent. Central and South America are a part of the world that we must keep high on the agenda. I support the theme of the noble Lord, Lord Giddens, that educational links are so important. I am proud that we have a very active Latin American department at King's College London. I suggest that we have another debate in six months' time, when the result of the important elections will have been declared. It is imperative that we are more active in this region and work towards maintaining good relations with these exciting, dynamic powers.

Lord Triesman: My Lords, like other noble Lords, I am very grateful to the noble Viscount, Lord Montgomery of Alamein, for giving the House the opportunity to discuss Latin America. I hope that the noble Lord, Lord Luke, will accept my apologies if I group south and central America as Latin America at least for this afternoon. It has been an important debate, and I appreciate his kindness and that of others for what they have said about what my work entails. I thank all noble Lords who have taken part, and it is a privilege for me to take part in the debate.
	It is almost exactly a year since the last debate on Latin America as a whole, although there have been two other specific debates in that time in which I have had the good fortune to take part, all of which demonstrate the dynamism and solid intent of the noble Baroness, Lady Hooper, in making sure that these issues do not vanish. This is the moment to take stock. Several noble Lords, in particular the noble Viscount, Lord Montgomery, have talked about opportunities. He is absolutely right. Great nations who ignore these issues and have ignored them for perhaps more than a generation will turn out to be absolutely misguided; we must not miss the tricks. My noble friend Lord Howarth stressed the issue of opportunity, and he and my noble friend Lord Giddens stressed it particularly in relation to higher education, as did the noble Baroness, Lady Rawlings, just a moment ago. All of those help us to get to the right point of focus.
	Some noble Lords believe that we must pay more attention to Latin America, and I agree. I make no apology for our focus on Africa in 2005, or for arguing that our involvement in Africa is long term if the millennium development goals are really to be achieved. That does not make Latin America unimportant, uninteresting or less fascinating to any of us. Old ties of friendship and trade, and new understandings of economic and cultural opportunity demand more, not less, attention. It is a dynamic, creative region with a powerful, diverse intellectual and cultural identity. The FCO White Paper Active Diplomacy for a Changing World does not list countries as much as identify the themes that we must grasp in our epoch. Most of those themes are relevant to understanding Latin America. The Government are building on an understanding that embraces the whole of Latin America and the Caribbean as well as its individual nations in all our bilateral visits to the area; in the frequent meetings that I and others have had with presidents, Ministers, ambassadors and high commissioners; in the work that we do through the European Union; and in events such as President Lula's outstanding state visit.
	My noble friend Lord Brennan was quite right to remind us that as we do so we must also understand that reliance on high raw material prices over long-term aspirations and economic developments is unwise. That is part of the setting of what I want to argue. As everywhere, Latin America's future depends on successes in international markets. It is inevitable that Brazil and Mexico, our outreach partners at Gleneagles, are key strategic partners for this country in that continent. It is true for trade and for shaping the future rules of trade. The noble Viscount, Lord Montgomery, was right when he said that we are looking for the right structures and what he described as wholly honest ones.
	What is fundamentally true for those countries is true for others. All face the challenges of blending security, development and human rights—the pillars of progress identified by Kofi Annan in 2005. Poor governance, instability and poverty form a vicious circle. It is against that template that we must do all our new thinking. These are complex issues. We seek a balance between a continent with less micro-economic rigidity, which constrains growth and investment and in the final analysis hurts the poor, and infrastructural investment directed at the education and health of the poor and excluded—the indigenous people to whom the benefits of natural resources and growing trade so seldom come. The noble Lord, Lord Thomas, called for understanding and care in this area and my noble friend Lord Howarth also spoke of this dual focus. Just a moment ago, the noble Lord, Lord Roper, addressed these underlying trends as well.
	We live in a world shaken by international terrorism, yet Latin America has made great strides in security. It is free of nuclear, chemical and biological arms, and I believe that there is no compelling evidence that Venezuela intends to change that in terms of nuclear development. This is a continent broadly committed to non-proliferation and with little demand for missiles or warheads. The noble Lord, Lord Thomas of Swynnerton, rightly identified the persistent peace between nations on the continent. Over 20 states have binding confidence and security-building arrangements. Its troops are at the core of peacekeeping missions such as those in Haiti and the Democratic Republic of Congo, where Guatemalans heroically gave their lives for African peace.
	The noble Baroness, Lady Hooper, emphasised the international role now being assumed by Latin American states, and I could not agree more. It is in Latin America—specifically in Chile and Mexico, with help from Canada—that new understandings have been forged for the UNDP report New Dimensions of Human Security, which grapples with the relationship between national and human security. The special conference on security held in Mexico in October 2003 addressed all of the questions that rightly concern us here this afternoon: bearing down on drugs and arms trafficking; poverty and social deprivation; terrorism and organised crime; guerrilla warfare and subversive organisations; environmental degradation and natural disasters. All of this work is being encouraged by Latin Americans themselves in the new architecture of the inter-American commissions.
	It is true, as the noble Baroness, Lady Hooper, reminded us, that democracy is spreading more generally, is in many places sound and runs to the right timetables. Much of the work that is still needed in the democratic architecture is stirring below the surface. I also welcome the IPU's work, as did the noble Lord, Lord Roper. In just the last year, parliamentarians have visited Uruguay and Argentina, Paraguay, Colombia, Peru, Chile, Costa Rica and Nicaragua.
	It is all in many ways encouraging. So why is there a sense of anxiety about this complex of development, security and human rights? What still fuels apprehension about economic development capable of lifting the continent's poorest people from abject poverty? First, of course, it is the history of instability. Since 1990, there have been five coups d'etat, social upheavals have removed eight more heads of state, and there have been 19 military crises or declared states of emergency that I can identify. My noble friend Lord Rea also reminded us of parts of that history.
	The murder rate in the region is the highest in the world, with more than 25 murders per 100,000 people per year. Uruguay and Chile happily show no such problems. The victims are typically young and their deaths, whether in gang wars, or as victims of the maras in central America or narcotics racketeers in Colombia, Peru or Mexico, cost the region 14.2 per cent of GDP, according to the Inter-American Development Bank. I have not even tried to factor in the costs of robbery, abduction and child homicide.
	To be sure, there are still border disputes: for example, the Belize/Guatamala territorial dispute where we support Belize's territorial integrity. But it is also true that some of the violence that we are looking at in today's debate is within and not between-states conflict; it is transnational and intra-state. On many occasions we fear that some states may turn a blind eye to some of the international criminals involved in narcotics, arms racketeering and people trafficking. But these criminals are indifferent to borders. Most significantly, they tend to populate the space left by poor governance and weak democratic practice.
	That remains the difficult key to understanding much of Latin America and the Caribbean in practice. Insecurity surely results still from the fact that governments are unable to assert the rule of law in their own territory but lack a monopoly over the use of force in their territory. As ever, among the chief victims in a civil society too weak to play the necessary anchor role in national stability are trades unions, Churches, women's organisations and, tragically, young children.
	What a contrast can be seen where governance is strong and economic growth has been shown to follow it. For the most part, it remains nationally strong not only where regional markets have taken root but, most importantly, where there have been real developments in the economies of those countries. I fear that the prospects of a free trade area for the Americas are still limited. Caribbean integration is just starting, as I found out in the region last week. Recent national independence continues to curtail a desire for greater economic integration. I will return to the WTO later.
	Lack of key reforms and weak fiscal structures and institutions remain significant difficulties. Those are everyday systemic problems and, at times, like the key WTO rounds, are considerable barriers to progress. Thus the volatility of Latin American markets is sometimes striking when compared, for example, with emerging Asian markets. Rapid growth in Latin America has too often given way to sharp reverses. In truth, and despite some periods of remarkable growth to which noble Lords have drawn attention today, it was not until the 1980s that market-oriented policies designed to achieve any measure of macroeconomic stability were realistically attempted. The measures to remove high tariffs, import substitution, credit rationing and massively regulated labour markets were finally tried, although somewhat inconsistently. But where they have been tried the successes have been clearer. The evidence is most abundant in Brazil and Mexico, for example, which may be the reason why their true and huge potential may come to be fully realised.
	I contrast that with Chile which saw through its reforms under centre-left governments shrinking national debt, lowering tariff walls and liberalising trade, a course now followed in NAFTA by Mexico. As my noble friend Lord Giddens said, Chile's economy is a remarkable model. It accompanies political liberalisation and sound social policy, which are drawn together. The impetus is gradually taking hold as budget deficits, more flexible exchange rates and better public debt to GDP ratios figure in economic planning. We can all see the benefits. For a decade from 1986 inflation across Latin America averaged more than 180 per cent. The figure for 2005 is 6.3 per cent and it is falling.
	That brings us to the crucial questions posed by my noble friend Lady Symons and others. Progress on global trade talks, economic liberalisation and regional integration is vital for Latin America's development. We share with Brazil, Mexico and other countries in the region a common view of the main elements of an ambitious pro-development outcome to the WTO round. A successful round is essential to lift millions out of poverty and to integrate poorer countries into the global economy. We believe that all the main parties, including the EU, the United States and G20 now have to take the bold steps necessary to drive this through. Commissioner Mandelson continues to urge the region to integrate to a greater extent. When I last heard him speak he sought greater coherence from Mercosur, arguing that asymmetry in economies made it difficult. None the less, as the noble Lord, Lord Roper, said, whatever the shortcomings it is necessary to make the achievements. Regional integration is where it happens: a positive force for stability, economic growth and investment in Latin America.
	Recent developments including the withdrawal of Venezuela from the community of Andean nations and the creation of the Bolivarian alternative, ALBA, to which my noble friend Lord Rea also made reference, which seeks to be a counter to the free trade area, have shifted the ground and made it all the more difficult. We will continue to follow those developments on regional integration in the area with interest. Negotiations with regional blocs are difficult but there have been some effective gains, some positive results in discussion with individual countries. That is most clearly illustrated by our work with Brazil on the Doha development round. I emphasise development because that is the point of the Doha round.
	Will there be progress in Vienna? There are highly diverse positions. Bilateral approaches may be more successful at this stage because there continue to be fracture lines within the regional groupings. Would it be helped if educational opportunity spread more widely, as the noble Lord, Lord Giddens, suggests? The answer must unquestionably be yes, because the importance of those developments requires people capable of motoring those developments to a conclusion.
	The noble Lord, Lord Walker, and the noble Baronesses, Lady Thomas and Lady Hooper, also raised the issue of China's role, and other noble Lords have mentioned it. China has a major involvement. I shall not go through the list of statistics of the extent of its involvement now, because noble Lords will already know that it is huge. Its trade alone rose by 400 per cent between 1999 and 2004 and most of the other figures show similar rates of increase. Investment has been targeted at sectors related to Chinese interests, especially oil, minerals and some transport and infrastructural projects. All of that is a picture of a profound challenge and we would be foolish to neglect it. All of us would be foolish not to try to put in the effort required, although whether anyone these days can match the entirety of China's efforts across the world in that respect is a difficult and important question.
	We can see the architecture in all of that of the UK's strategic interest. We need to work on governance in the fullest sense. We need to aid those nations attempting to close down narcotics empires and trade in arms and in people. We need to work for human rights. We need to work on economic reform in the context of globalisation and to understand that we must do so in a developmental way. In short, the programmes that lift the poorest people, the most dispossessed indigenous peoples, out of poverty and all of its sickening adjuncts in violence, must be part of our programme. That is why the Government are committed to helping the region where we can. Like the noble Lord, Lord Roper, who appealed to us to make sure that our role addresses poverty, development and security, we are trying to do that. We are providing £6 million over three years under the global opportunities fund covering economic governance, climate change, energy and sustainable development; around £100 million per year in DfID development funding; £3.75 million over three years for global conflict prevention in law and order and security; and £1 million this year for tackling drugs and crime. I share with my noble friend Lord Howarth the importance of the Key West work. We should be determined to interdict drugs before they arrive on the streets of the United Kingdom. I was able to discuss that matter last week in Kingston, Jamaica, and with the Caribbean Forum.
	A good deal of work is also proceeding on water. There is a high-level sustainable dialogue with Brazil, which was signed during the Brazilian state visit, and similar sustainable dialogues are going on with Mexico later this year. We aim to build a strong bilateral contact, building capacity and facilitating exchanges on those questions. My honourable friend Elliot Morley attended the World Water Forum in Mexico in March to drive forward those discussions.
	The work is focused on central America, the Andes and Brazil. It covers good governance, the impact of trade on poverty, the access of the poor to markets, the benefits of legal economic activity and HIV/AIDS. The sum of £7 million a year goes to six British NGOs to support their work in the region. It is an estimable programme, although I too think that there are problems with the definition of "middle income" that may impose a limit that some would regard as restrictive. But the Government concluded that work of this kind requires a specialist department to undertake outreach into the world, rather than the type of work conducted by the FCO. I always like the moments when someone suggests huge growth in my department's resources, and I thank the noble Viscount for suggesting it. There has been a good argument for separating resources so that they do not become tangled up and our aid and trade and foreign policies do not become so confused in operation as to limit their value.
	I deeply respect the 50 years of experience of the noble Viscount, Lord Montgomery, and I understand his argument that this arrangement should be reviewed. I know that some heads of mission spend money on development because they have a small element for it in their budgets. I suspect that were that element larger, they would spend a larger amount equally effectively. It is certainly true that the separation of departments exists, and I can happily tell the House that there is a good working relationship between DfID and the FCO and that my right honourable friend Hilary Benn and I meet frequently and talk pretty much daily.
	Trade promotion is an important area of co-operation. My right honourable friend Ian Pearson bridges the departments of the DTI and the FCO, and I am proud of the FCO's expertise in the relevant areas. But it is always worth reviewing how we promote trade, and I shall report this discussion to the Foreign Secretary to seek his view.
	I shall turn briefly to other issues that were raised. On Argentina, I respect the view of the noble Lord, Lord Luke, that growth has been fundamentally good and that there are still anxieties among investors who dislike rude shocks. Voluntary price restrictions are a difficult counter-inflationary weapon to use effectively regardless of whether they are bolstered by a ban on beef exports. They do not appear to be strong. On the issue of the isolated communities that are cut off by recent floods, there has been no request from the Argentineans for any assistance. We hold regular discussions on the south Atlantic fisheries with Argentina. The last discussions took place in Buenos Aires in December 2005 and we are talking to our colleagues about arrangements for the next talks.
	The noble Baroness, Lady Rawlings, the noble Viscount, Lord Waverley, my noble friend Lord Brennan and other noble Lords raised the Bolivian hydrocarbons issue. It is a significant development. I understand that there is a meeting between the presidents of Brazil, Bolivia, Venezuela and Argentina in Brazil today to discuss the future of Bolivia's hydrocarbons industry. In advance of that meeting, I will say only that I think that the original contracts were fair. My noble friend Lord Rea raised the issue of the new arrangements that may be made, and I have no idea about them. However, it is difficult to imagine that the outright imposition of nationalisation will boost international investor confidence. I suspect that this is an issue that will need to be looked at.
	As for our work in Colombia, we remain keen to see all steps taken to end the inter-community disputes. We continue to press the issues and are eager to ensure that Colombia's human rights record improves.
	I will ensure that I address any outstanding questions. This has been a valuable debate which has allowed us to discuss developments in the region a year on. Our friends and even our critics in Latin America will know that we are ambitious for Latin American success. We believe that volcanic economic policy changes can devastate the prospects for investment and that with devastation the prospects for the poor get poorer. Everyone should know that today's headlines are only that—just today's headlines. It takes real leadership in any country and on any continent to distinguish between a bandwagon and a tumbril. The Government will continue to have a full agenda with Latin America. I will certainly try to take that forward in the coming year and will not lose enthusiasm. If I may say so, I do not believe that the noble Lord, Lord Brennan, would allow me to.

Viscount Montgomery of Alamein: My Lords, I have only a minute or two in which to reply, so let me first thank all noble Lords who have spoken, particularly for their very kind remarks about me personally, but also for the extraordinarily wide range of this debate. It is quite clear that we have covered not just the whole continent but also a vast number of the individual countries. From what the noble Baroness, Lady Rawlings, said, it would clearly be a good idea to have some more debates, but perhaps we should narrow the focus for the next one. She and, indeed, all noble Lords can rest assured that while there is breath in my body I shall be pursuing this cause.
	In particular, I should like to thank the noble Lord, Lord Triesman, for his comprehensive comments. I am sorry that he did not like the idea of a powerful Foreign Office because I think that that would be beneficial, but I have no doubt that I shall pursue the matter. I look forward to further encounters on this idea because we will come back to this issue. The noble Lord, Lord Triesman, should and, I hope, will be promoted, because we need him. We need his ideas and we need the Foreign Office, so let us go forward in the hope that great things will happen. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

Parkinson's Disease

Baroness Gale: rose to ask Her Majesty's Government what further measures they are taking to assist people with Parkinson's disease and their carers.
	My Lords, there are approximately 120,000 people in the United Kingdom with Parkinson's disease. It was once regarded as an illness of older people, but one in 20 people under 40 has Parkinson's and approximately 10,000 people a year will be diagnosed with the disease. It is a difficult illness to diagnose and there is no known cure, but it can be controlled with medication and drugs. There has been much research over the years and there have been improvements to patients in the way in which drugs are administered.
	If someone in the family has Parkinson's, it affects the whole family. My mother cared for my father when he had Parkinson's, but she would not have called herself a carer, as she would have regarded her caring for my father as something that a wife would do. I was about 15 when my father was diagnosed and over the years, as his illness progressed, I had the feeling of being deprived of my active and loving father. I make this point to illustrate how the whole family is affected.
	It is estimated that approximately 7 million people in the United Kingdom are touched by Parkinson's, if one includes families, friends and carers. Carers now have more support and there is better treatment as well as much more knowledge and research. The Parkinson's Disease Society has played a tremendous role through the help and support that it gives and through the money that it raises to fund research. I would like to take this opportunity to pay tribute to the wonderful work that the society does, from which so many people benefit.
	Last week, the society held its Parkinson's awareness week, the theme of which was "Get it on time". Its aim is to highlight the problems for people with Parkinson's if they are admitted to hospitals and care homes and do not receive their medication on time. The campaign draws attention to the fact that rigidly timed drug rounds in hospitals and care homes can prevent patients from managing Parkinson's effectively and can lead to their becoming very ill and disabled unnecessarily.
	The Parkinson's Disease Society has carried out a survey among Parkinson's disease nurse specialists, which revealed a number of worrying findings. Not a single nurse believed that patients with Parkinson's were guaranteed to receive their medication on time. Nine out of 10 nurses found that patients with Parkinson's experienced clinical problems or an extended hospital stay as a result of missed or late administration of their medication.
	When a person with Parkinson's cannot take their prescribed medication at the right time, their symptoms become uncontrolled and they can become very ill. The "Get it on time" campaign is aimed at changing that by ensuring that every person with Parkinson's gets the right medication at the right time. People with Parkinson's have highlighted that as a top priority that needs tackling throughout the health service. Steve Ford, the chief executive of the Parkinson's Disease Society, said at the launch of the campaign:
	"It's completely unacceptable that people with Parkinson's are currently anxious about being admitted into hospitals and care homes across the UK because of a real risk that their Parkinson's will get a lot worse. We want all hospitals to immediately implement the standards laid down by the Department of Health for medicines management and have written to every chief executive within the NHS to ask them if they are aware of what is happening for patients with Parkinson's in their hospital. This is not about the numbers of nursing staff. It's about wanting hospital employees to understand Parkinson's better and what happens to people when they don't get their medication on time. We urge them to listen to the person with Parkinson's, their carers and their families, as they know exactly how to manage their condition".
	What measures are being taken to get that message across and to emphasise its importance?
	Parkinson's specialist nurses have great importance. They specialise in the care of people with Parkinson's, either full or part time, and are an invaluable source of help and support to people with Parkinson's. Unfortunately, there are insufficient specialist nurses, but my noble friend Lady Morgan of Drefelin will speak in greater detail about that later in the debate.
	In order for the Government to give more support to people with Parkinson's, will the Minister consider the following requests from the Parkinson's Disease Society? First, all people with Parkinson's should have access to a specialist nurse. Secondly, they should be exempt from all prescription charges. I am sure that the Minister will be aware that in Wales prescription costs have been reduced to £3 this year and by 2007 all prescriptions in Wales will be free. I look forward to the Westminster Government following the good lead given by Wales. Thirdly, there should be improved support for carers, including access to respite care, and advanced stage care should be universally provided. Fourthly, there should be better provision for information resources and programmes to promote control over and self-management of the condition.
	The NICE guidelines on Parkinson's disease are expected to be published next month. Although there are more than 70 separate recommendations, NICE has identified five areas as priorities for implementation. People with suspected Parkinson's should see a specialist quickly; there should be regular reviews and access to health professionals, such as a Parkinson's specialist nurse. Reliable information should be given about Parkinson's, its symptoms and treatments, and about the wider issues that can affect people with the disease, and their family and carers. There should be an offer of help from a physiotherapist, occupational therapist and a speech and language therapist, and the palliative care requirements of people with Parkinson's should be considered at all stages of the disease. Those are very good priorities. I look forward to the publication of the NICE guidelines, which, when implemented, ought to make a big difference to people with Parkinson's and their families.
	I would like to say a few words about carers, although other noble Lords will address this issue. My noble friend Lady Pitkeathley had hoped to speak in this debate, but unfortunately she had to withdraw; your Lordships' House would have benefited much from her expertise and knowledge on carers. All people with Parkinson's, as well as their carers and relatives, should have the opportunity to access in a timely fashion a range of high-quality, specialist care services that are appropriate to their clinical, social care and emotional requirements. Services can include in-patient and out-patient hospice care, bereavement services, effective clinical management of symptoms via pharmaceutical intervention and/or surgery respite care, and appropriate care provision. It is vital that carers' assessments are effectively promoted and conducted to ensure that a person caring for someone with Parkinson's receives the appropriate level and range of support necessary.
	Additionally, the standard set out in the national service framework for long-term conditions and the Our health, our care, our say White Paper proposals will need effective implementation if we are to see an improvement in support for carers. I am aware that the Parkinson's Disease Society welcomes particularly the White Paper's proposals to introduce an expert carer programme. Can the Minister say when the updated carer strategy will begin? How will primary care trusts and local authorities be encouraged to appoint a carers' lead?
	I have mentioned several matters of concern for people with Parkinson's and their carers. The Government have made progress in a number of areas and I have mentioned a few. I look forward to what other noble Lords have to say, as I look forward with interest to the Minister's response.

Lord Harrison: My Lords, I, too, thank my noble friend Lady Gale for introducing this important debate and report that, indeed, my noble friend Lady Pitkeathley is unavoidably detained. She would have recognised that the Minister who is to reply was one of the first to acknowledge the needs of carers when he was a director of social services. When she was chairman of the Carers National Association, some of the research that he instituted on the position of carers was responsible for moving the political agenda on. She also would have pointed to the importance of carers, who often deal with the personality changes of those who are in their charge; and often their commitment lasts as long as 20 years. She would also have pointed positively to the fact that carers are often those with the best knowledge of this disease, due to the unique position in which they find themselves.
	Would the Minister comment on how we can encourage the tapping of that enormous resource of carers; and will he give us news of the suggested updating of the 1999 national strategy for carers to ensure that cross-departmental co-operation is promoted to the utmost?
	I acknowledge that the Government have recently put tremendous resources into the health service. As the Minister knows only too well, the trick is to spend that money well and wisely. Sometimes I have a worry that Parkinson's sufferers and their carers have missed the boat. Sometimes I feel that our attitude to Parkinson's is like the experience of its sufferers—subject to a poor posture, and its slow change comes with a tendency at times to stoop backwards in the wrong direction. At other times, our approach seems to be a series of small, unsteady steps of action. We seem to allow the Parkinson's patients to fall down flat, due to lack of resources, understanding or provision of specialist advice on the management of this most ungainly and, sometimes, most undignified disease. Just imagine the dilemma of many PD sufferers going to the local polls today to vote, knowing that, once again, they will be subject to the public gaze, to unwitting misunderstanding, sometimes to ridicule and, worst of all, sometimes to pity.
	Let me give some examples of what I mean by our occasionally jerky and unbalanced approach to this debilitating disease, to its sufferers and to those who care for them. I have been grateful to the PDS over the years of my association with Parkinson's disease. I recently met many dedicated medical researchers who are searching for solutions to this important disease. They have been using the £30 million which the PDS has accumulated over many years. But why the begging-bowl approach? Is it really a disease that we should regulate in this way and expect money to be constantly generated by those enthusiastic about doing something about it? This should principally be state-funded, and I wonder whether the Minister can give us an update on the research and say what the Government are doing to put more money into this important area.
	Another example of our approach is that PD sufferers must pay for their prescriptions, as my noble friend Lady Gale said. This is not the case for sufferers with a condition such as diabetes. What is the historical reason for this? Why cannot we do something about it? Many Parkinson's sufferers are below pension age and so literally have to cough up.
	I declare an interest in this subject as president of the Chester branch of the Parkinson's Disease Society. I am always astonished by the courage of sufferers and their helpers. We are currently fighting in the area for a PD nurse specialist, and even though we collected £20,000 in funds, the PCT has not been able to match it. So the people in the area will be deprived of a hugely important resource. The members of the Chester branch funded a leaflet to put into GPs' surgeries to help people to understand where they can contact their local PDS. I have to tell noble Lords that it has been difficult from time to time to display such useful information in GPs' surgeries, and I ask why it should be up to the members of this local PDS to have to fund such a useful document.
	This experience is not confined to Chester. Someone in my family has recently joined the ranks of those who suffer from Parkinson's disease, and when close members of my family went to the local GP's surgery, they could not find any information on the carrousel about the local PDS. I really do not think that that is tolerable. My near and dear relative has to take about 38 pills every day. The GP gave him some pills, and he hallucinated when he took them the second time—a common symptom of the disease when no proper diagnosis has been made and no proper way forward has been described by the GP. It is essential that a consultant is used in order to put sufferers on the proper medication.
	That brings me to the current PDS "Get it on time" campaign, which my noble friend Lady Gale described so well, to ensure that the sufferer can be sure of getting the appropriate medicine at the right time. The situation is by no means perfect. Too many nursing and care staff in our hospitals are untutored in this area, and the drugs round is inflexible, as I experienced when I was in hospital and needed care—not for Parkinson's, but for something else. One in five PDS nurse specialists believes that patients do not receive their medication on time.
	The situation is actually worse in care homes than hospitals. There are too many people, as outlined in the Commission for Social Care Inspection report Handled with Care?, which points out that we are not meeting even the minimum standards of medication. There is an absence of proper training of care workers in those institutions. Care staff should be accredited: we should ensure that such staff have basic information about Parkinson's. Can the Minister comment on that?
	There are some solutions, such as providing pill timers for nurses. Perhaps that could be introduced as universal, especially in hospitals. Training videos made by local PDS groups may, again, help hospital staff to better understand the nature of the disease. Then there is the co-ordinating of GP records about changed medication with those of hospitals, since medication has to be changed nimbly in order to ensure proper catering for the Parkinson's sufferer. I believe there are some examples of moves that the Minister could comment on, but how might this be improved?
	There is also the programme for self-medication in hospitals. Often, the Parkinson's sufferer or, indeed, the carer is best placed to ensure that such medication is properly applied. I hope that we can help there and that the Minister can think about extending current funding for the medicines management collaborative project, which seeks to promote best practice within the service.
	I conclude on a note regarding the European Union. The medical experts from the Parkinson's society that we met the other day told me that, because they have a small population upon which to do their research, it is absolutely necessary to collaborate with others around the European Union to get a true view of the situation with respect to research. Can the Minister say a little more about the European Union angle? What more are we doing in collaborating to tackle this most disastrous of diseases?

Baroness Finlay of Llandaff: My Lords, like other noble Lords I am most grateful to the noble Baroness, Lady Gale, for initiating this debate. It is so important that those suffering from Parkinson's disease do not remain invisible. Indeed, the Parkinson's Disease Society recently published its own study Just Invisible, in March 2004.
	As the noble Baroness, Lady Gale, said, the disease is remarkably common. It hits around one in 100 people aged over 65; but, make no mistake, one in 20 of those with Parkinson's were diagnosed under the age of 40. Until the 1960s, nothing could be done. Then, in 1962–63, Oleh Hornykiewicz discovered the potential of L-Dopa. The change was popularised in Oliver Sacks's wonderful accounts of awakenings in patients with post-encephalitic Parkinson's who had the drug. While L-Dopa is now a standard treatment, it is not without its side-effects and difficulties, as has already been indicated.
	Parkinson's is a strange disease. It hits those with education more than those with manual jobs. It is more common in those who have had nine or more years of education, and I am afraid to say that physicians have a particularly high risk of developing the disease. Two other conditions—multiple system atrophy and progressive supranuclear palsy—can look just like Parkinson's in their early stages. That underpins the need for specialist neurological input for accurate early diagnosis. A change in the diagnostic label and prognosis as a disease progresses can be hard for patients to adapt to, when they already have much to adapt to emotionally. It is hard for their carers as well.
	Yet, whatever the variant of Parkinson's disease, there is no cure and patients can truly be said to need palliative care from the time of diagnosis. I must declare my interest: I am professor of palliative medicine at Cardiff University and I want to refer both to palliative care and, in particular, to the university's research. For the record, I remind your Lordships that the World Health Organisation defines palliative care as,
	"the total care of patients whose disease is not responsive to curative treatment. Control of pain, of other symptoms, and of psychological, social and spiritual problems is paramount. The goal of palliative care is the achievement of the best possible quality of life for patients and their families".
	So let us just consider what the palliative care needs are—what can be done, and what we are actually doing.
	When asked where they want to be cared for if dying, around 60 per cent of patients say that they want to be cared for at home, yet only 20 per cent of the deaths occur in a patient's own home. This is despite evidence that approximately every £1 spent on community palliative care releases about £2 of hospital care provision to be freed up for use by others. Those with the disease repeatedly tell of a catalogue of uncoordinated, slowly responsive services. Around 70 per cent of the carers report damage to their own emotional or mental health and approximately the same number report their physical health adversely affected by the strain of caring.
	Respite care to give carers a break is just not available and is becoming less available as community beds and hospital beds are increasingly under pressure—yet timely respite care can allow a person to remain at home and functioning in the community for much longer and crises are avoided. However, it cannot and must not be just any respite care. As has already been stated, timing for drugs and meticulous attention to detail is essential for these patients. If they do not get their drugs, they become immobile and develop pressure sores. It is shameful to say, but some patients die from their pressure sores. That is unacceptable.
	What are the symptoms? Those with Parkinson's have a plethora of complex symptoms but they are ameliorated by good palliative care. Some 40 per cent experience pain, which is usually easily controlled with opioid analgesics. The sleeplessness and fatigue are being studied and it seems that physiotherapy and occupational therapy have much to offer, but the techniques are in the early days of development. Constipation and poor appetite—not the things that one talks about every day—deserve meticulous attention to detail. They make patients incredibly uncomfortable and can be sorted out relatively easily.
	One problem that is of particular concern is that there is often a degree of cognitive impairment and communication is so difficult that decision-making capacity can be impaired. That, combined with the social isolation that communication difficulties can impose, can make these patients particularly vulnerable. By being ignored socially, their self-esteem is lowered and depression can be difficult to detect. But we are only too aware of the way the disease hits those we know well in this House and through our work outside, and the enormous contribution that they make to public life, even in the face of advanced disease. Contributions from some noble Lords who have sadly been hit by Parkinson's disease are quite remarkable. They are often sustained through the efforts of their next of kin who unselfishly have supported them physically and with love. However, 45 per cent of all carers have been doing this for over 10 years and 10 per cent for more than 20 years. That is a huge toll.
	The Minister himself has gone on the record as saying that the Government fully recognise the importance of providing effective and efficient palliative and specialist palliative care services and  I hope that he will reassure us that he is continuing to take some action to ensure that there is equity of provision. The House of Commons report on palliative care criticised delays in accessing equipment and social care, and the inequity in palliative care provision.
	We must not get hung up on place of death—it is the living who matter, living for as long as possible as well as possible. Hope is emerging on the horizon through research. At my own university, quite a lot of research is going on. The genetic base is being examined. Gene mutations that underline inherited forms of Parkinson's are able to inform us about the disease process in total. We are fortunate in Wales because we have a relatively captive population to study epidemiologically. That allows us to look at the disease and disease trends.
	Stem cells have been much in the news, but there are difficulties in expanding the multi-potential cell while maintaining control over the way in which it differentiates to make sure that it produces just dopamine-type cells and not any cell. Dyskinesia—patients' odd, uncontrolled movements—is a side-effect of L-Dopa but such movements are also a side-effect of cell transplantation. There are real difficulties in this area, and research into its causes and ways to control it is essential.
	Research into palliative care is also essential, because hardly any good palliative care research for this population group has yet taken place. The Department of Health put out a call for research on long-term neurological conditions but I have heard that it has now frozen all funding for research in this area and is not supporting any work on the palliative care needs of patients with this and other neurological conditions. I hope that the Minister will clarify the matter and tell me that I am wrong.
	I conclude by referring to the recommendations in the report of the Parkinson's Disease Society, Just Invisible, because it provides a list of bullet points for action. It asks for the implementation of the National Service Framework for Long Term Conditions to ensure the quality requirement on palliative care. It recommends that palliative care services should be expanded and be available from the time of diagnosis, and be broad-ranging and holistic. It calls for greater interaction between the NHS, social services and the voluntary and charitable sectors to provide a seamless service and continuous care. It looks for training at all levels—undergraduate and postgraduate. That falls on to those bodies which are responsible for training. The message to them is that they must do something about it. The report states that the communication needs of those with Parkinson's disease must be addressed. Information about their disease, their medication and their side-effects should be provided; just giving them a leaflet is not enough. Their communication difficulties mean that they need face-to-face communication to express what they really need. Last but not least, relatives and carers need compassionate leave. They need a break and respite care. They need and deserve support. Otherwise, they will fold under the burden of care for the person they love.

Baroness Morgan of Drefelin: My Lords, I, too, congratulate my noble friend Lady Gale on initiating this debate. It is vital to raise awareness of Parkinson's disease, not just in your Lordships' House but outside. Debates such as this provide us with a great opportunity to ask the Minister questions, to learn about the disease and to find out who else among your Lordships is interested in this condition. Perhaps we can take from today's debate ideas for future debate and discussion. I am delighted to take part in the debate, to support the need to raise awareness of Parkinson's disease and to campaign for better services for people who are affected by it, as well as for their families, carers and friends.
	I am interested in Parkinson's disease from a number of different perspectives; first, because it is symbolic of the great deal of work that we yet need to do to embed a new way of thinking about the NHS and its provision of services for people with long-term conditions. When I first got involved in patient advocacy more than 15 years ago, one only ever heard about how long it took an ambulance to get to an accident or about what happened in hospitals. One never heard about the needs of patients with long-term conditions. That has changed. I hope that, with the national service framework, we will see some good news for people who are affected by Parkinson's disease. Common themes need to be addressed. The whole health service needs to be geared towards improving communication, recognising dignity and providing information, as well as towards recognising that patients themselves are experts. I am delighted that such an enormous expert patient programme is now being planned. That idea came from the voluntary sector. We are seeing progress in recognising the approach that needs to be taken for meeting the needs of patients with long-term conditions.
	I am also interested in Parkinson's disease from a personal point of view, because I have known people who have had experience of Parkinson's disease, made much more difficult by Alzheimer's, and I know how challenging it is for carers and all the people around who do not perhaps understand the real challenge of looking after a person and making their quality of life of as high a standard as possible. I have seen that first hand.
	I am aware of the incredible work of the Parkinson's Disease Society. I would like to talk in particular about the role and importance of the Parkinson's disease specialist nurse, as highlighted by my noble friend Lady Gale. I know that the Parkinson's Disease Society has invested an enormous amount of funding in pump-priming over 200 posts across the country. It has invested about £5 million in NHS services, for which we should pay it tribute. I am also delighted that access to a Parkinson's disease specialist nurse has been highlighted in the draft NICE guidance, which is soon to be released. It is extremely important that we should take note of the evidence published in, I believe, the British Medical Journal, which has shown that Parkinson's disease specialist nurses improve the quantity of clinical outcomes without raising costs. That is an important point. The role of the Parkinson's disease nurse is extremely important and I think that we would all agree that all people with Parkinson's disease should have access to the services of a specialist nurse.
	I have to declare an interest in the role of the specialist nurse, because my sister, Sarah Morgan, was one of the first specialist nurses. She was a nurse lecturer and was involved in establishing the Parkinson's Disease Nurse Specialist Association, which defined the role of a specialist nurse as having three main areas. These are vital for the success of the role. You cannot just concentrate on one part of the role. You need to be involved not only in assisting patients to promote quality of life, but in liaising with other professionals. As we have heard, Parkinson's disease is managed through a multidisciplinary team. It is essential that all those professionals work together in the best interests of the patient. Nine times out of 10, it is the specialist nurse who is responsible for liaising between the different professionals and acting as an advocate for the person with experience of the disease. The third and perhaps most under-promoted part of the Parkinson's disease specialist nurse's role is as an educator. We have already heard how people with Parkinson's disease can be invisible. They are invisible not just to those of us in the lay public, but perhaps also to the health professionals who should be there for them. Educating other professionals and people within the community and the hospital setting is extremely important.
	As we heard from the noble Baroness, Lady Finlay, Parkinson's disease is an extremely complex condition. The symptoms are difficult to manage. I think of it as a condition that comes about because of an imbalance—of neurotransmitters in the brain, of drugs, of care and of life. The Parkinson's disease specialist nurse is there to create a balance again, to bring balance back or to make it more possible. Therefore, the specialist nurses have to know about the mechanisms of drugs and how they work and they have to understand the pharmacology. They also have to understand differential diagnosis because they may be able to spot where an initial diagnosis has not worked.
	A great deal of time is taken up being very close to the patient, helping to control symptoms and getting the balance back. For example, even an anti-sickness drug prescribed by a GP can interfere with Parkinson's disease treatment. We have heard about the difficulties that may arise, from constipation, which is very uncomfortable, difficulties with sex, sleeping problems and self-confidence difficulties, through to very serious issues connected with swallowing and movement. Those can be controlled through a careful matrix of drugs, but if prescribers get it wrong just a tiny bit, that can cause huge difficulties for the patient, as we heard from the noble Baroness, Lady Gale. These expert nurses, who have a very high level of skill and knowledge, can get close to patients, advocate on their behalf, access for them physiotherapy, speech therapy and occupational therapy, and really champion their cause. It is extremely important that we understand the significance of their role.
	Those nurses reduce the likelihood of acute episodes, which is good for the patient and good for the NHS. As we have heard, it can even save money. That point applies to many long-term conditions and to respiratory nurses, asthma nurses or MS nurses. The development of these specialist nurses in the community and promoting nurse professionalism are absolutely essential, and they are a cornerstone of the Government's NHS reforms.
	The Parkinson's Disease Society is extremely worried about the effect of NHS restructuring on Parkinson's disease specialist nurses. We need to ensure that the numbers stay up. There are 200, but that is only 75 per cent coverage. We need to ensure that these specialist nurses, with their skills, knowledge and experience, who have slogged for years to get where they are, are not used to cover wards, as replacements for temporary staff or as bank staff. They should be out there in the community, or wherever their patients need to be, doing their job and bringing the NHS and patients the benefits that that brings.
	I hope that the Minister will assure us that he believes very strongly that we need to make the most of specialist nurse skills, that nurses are best placed doing their job in the community and that trusts that advocate relocating specialist nurses should be encouraged to reconsider in order to make the most of the Parkinson's disease specialist nurse. May we see a move towards more than 200—to 250 and more.

Baroness Barker: My Lords, I thank the noble Baroness, Lady Gale, for giving us the opportunity to speak about this issue today. I thank her particularly as this is an extremely timely debate. I want to carry on from where the noble Baroness, Lady Morgan, left off and to talk about this issue in the context of the NHS restructuring.
	It has been my privilege to take part in similar debates in your Lordships' House on other neurological conditions such as epilepsy or MND. It is right that we should have those debates in this House from time to time for three reasons. First, as the noble Baroness, Lady Finlay, said, this is a time of great potential in the development of different areas of neuro science; for example, in stem cell therapies. I hope that the Minister will expand on the statement made by his colleague in another place on 25 April about £20 million being given towards research, principally at Newcastle University, on dementia and degenerative neurological conditions.
	Secondly, as we read every day in the newspapers, this is a time of unprecedented restructuring in the NHS. Thirdly, as the NHS prepares for the introduction of practice-based commissioning, it is an opportune time to look at the effectiveness of the implementation of the NSFs, particularly the one on long-term conditions to date, and to see where that sits alongside the implementation of the White Paper Our health, our care, our say.
	Whether or not it has been the best year ever for the NHS, it has certainly been the most disruptive year ever for primary care. I spent today, in between doing other things, sitting with a bunch of staff, volunteers and trustees who work with older people. We were having an away day, trying to work out what it is that a voluntary organisation can do to be part of the government agenda of moving away from hospital-based care, improving life for patients—older people in our case—and making sure that acute episodes of care are diminished. The number of initiatives and structures that we have to deal with is simply mind-boggling. It is interesting today to take Parkinson's as just one condition that we could hope to work through, to try to see what the care pathway should be in the new set up because it is not at all clear. At the moment PCT reorganisation is making it extremely difficult to have conversations about service commissioning with people in the NHS to try to plan the way through.
	The British Neurological Association has said quite clearly that it is obvious what is needed for people with Parkinson's. All patients with neurological symptoms need a diagnosis and prompt and appropriate treatment and it has long been known that this can be achieved by access to high quality neurological services which are part of a clinical neuroscience network, combined with community services which share common protocols and guidelines. It has also been clear for some years that PCTs need to act in consortia to ensure that services are commissioned on an equitable and effective basis.
	Can the Minister share with the House his thoughts on how practice-based commissioning will impact on the planning and delivery of specialist neurological services? What, for example, will be the mechanisms for ensuring that neurologically trained GPs with special interests will be available in each area to be the interface between primary and tertiary care and to assist other GPs with diagnosis and management of the common, less complex out-patient neurological problems? Has thought been given to the way in which there can be integrated pathways of care for people with Parkinson's?
	I noted what the noble Baroness, Lady Morgan, said about the role of Parkinson's disease nurses. I agree with her that nurse specialists are integral in the whole process of care management. I would be interested to know the department's thinking on how to make the most effective use of those nurse skills. It makes no sense for highly trained nurse specialists to be spending time carrying out non-nursing tasks when they could be working with others and using their time and skills more effectively.
	The introduction to the NSF for long-term conditions includes the following quote from Harry Caton, Director for Patients and the Public, Department of Health. He said:
	"When you leave the clinic, you still have a long term condition. When the visiting nurse leaves your home, you still have a long term condition. In the middle of the night, you fight the pain alone. At the weekend, you manage without your home help. Living with a long term condition is a great deal more than medical or professional assistance".
	How true. That is why it is so important that the Parkinson's Disease Society has focused on its "Get it on time" campaign. It focuses not just on the impact of medicines not being available at the right time, but also picks up on all the factors of round-the-clock care of somebody who has fluctuating symptoms that cause people to spend time in acute hospitals unnecessarily.
	It is the simple things in the care of a patient—which may not be medical—that impact on their general health. It is unsatisfactory that people should spend time in NHS acute wards. It increases costs to the NHS. It is unsatisfactory for patients, who are in danger of acquiring a healthcare-acquired infection. When we return to look at the commissioning process for community care, will it be possible to show the cost-benefit analysis to the NHS of non-medical interventions alongside the cost to carers and those of us in the voluntary and community sector of not understanding what the medical treatment should be? There are costs on both sides.
	Since 2001, the National Prescribing Centre has helped NHS organisations to improve medicines management. Will those and similar initiatives be continued? They should be continued, because they benefit patients and save money. The report by CSCI on medicines management in care homes from February 2006, Handle with Care?, showed that 50 per cent of care homes for older people are still not meeting minimum standards for medications. My honourable friend in another place, Paul Burstow MP, showed in August 2005 that just 12 in every 1,000 care homes exceeded minimum standards for distributing medicines to elderly people. Those standards include the requirement for staff to prompt the review of residents' medication on a regular basis. The Parkinson's Disease Society recommends the inclusion of standards for administration of medication in the review of the provisions on national minimum standards for care homes of 2001. I hope that the Minister can assure us that good practice of that kind will be included.
	As other noble Lords have said, there is one group of people who are also affected by the failure to administer medicines in a timely and regular fashion. Carers, the people who know people with Parkinson's disease best of all, suffer too the distress of watching someone they love in discomfort and pain. For anyone who cares for someone with an incurable condition, variation in that condition can be acutely upsetting. Not to know whether the symptoms that someone is displaying are the signs of a temporary setback from which they will recover or mark another step along a degenerative path towards their end, is an agony for the carer. We really should not put them through that when it is avoidable. Has there been progress in ensuring that every carer receives an assessment? We know, despite the new review of the carer strategy, which the Minister told me in answer to an Oral Question a few weeks ago had started, that carers are still not getting those assessments.
	There is much going on in the NHS that is to be applauded; there is too much going on in the NHS that is unplanned and fragmented. Now is the time when it should be possible to make apparent clear pathways for people who have long-term conditions. It should be possible to see clearly how something such as the effective administration of medicines can save time, money and effort for the NHS. There is a key question here. Which part of the NHS is to benefit from the effective administration of medicines for patients? Is it GPs, who will be in charge of budgets? Is it acute hospitals? Is it nurses? Who is it? That is not clear, and as long as that muddle remains at the heart of care planning, many initiatives such as those that we have heard about today will not be implemented as soon as they could be, and patients will suffer as a result.

Earl Howe: My Lords, I congratulate the noble Baroness, Lady Gale, on tabling this Question and on the wonderful way in which she introduced it. Having listened to her and to other noble Lords who have spoken, I am not sure that there is much for me to say, but I should like to spend a moment or two developing a few of the main themes of the debate, to which I hope the Minister will be able to respond in his usual constructive way.
	I was out shopping the other day, and ran into a woman friend whose father has had Parkinson's disease for some years. His condition had been well controlled by medication. I asked her how he was, as he had just been admitted into hospital for a minor procedure. She told me the shocking news that he had died, and not from the surgical procedure but because the hospital had failed to administer his medication on time. As a direct result of this, he had had an accident in the ward and sustained injuries from which he never recovered. My friend was naturally devastated by this, but she was not proposing to make a complaint or to take the matter any further. After all, as she put it, nothing would bring her father back again.
	I did not feel able to tell her that the poor treatment her father received was not by any means an isolated case. Indeed, such stories are all too common, albeit perhaps not with fatal outcomes. It is a pretty sorry state of affairs that the Parkinson's Disease Society should have to mount a public campaign directed at the health service to ensure that Parkinson's patients in hospital should get medication on time. Why is there this pervasive problem? The society will tell you that it is a mixture of things. Some hospitals are not flexible enough to vary the timing of drugs rounds. Many nurses do not understand Parkinson's, nor do they appreciate how crucially important it is to administer medication on the dot. Many hospitals will not let patients administer medicine to themselves. Some seem to think that you can give a substitute medication without worrying too much. The truth is that every patient is different in the drugs that they take, and one person's drug regime may have taken a long time to get precisely right. Disrupt that regime and, as we have heard, you can instantly set the patient back days, weeks, or even months. As my friend found, you can also put the patient's safety at considerable risk.
	The society found that 19 out of 20 patients with Parkinson's experienced problems while in hospital. The cost of this can be measured not just in suffering on the part of the patient, but also in longer hospital stays, higher treatment costs and greater burdens for nursing staff. The lessons are clear for hospital management and clinicians, as well as nurses. The chief pharmacist in a hospital should have a system in place to flag up people with Parkinson's as soon as they are admitted to make sure that their medication needs are assessed. Consultant neurologists and chief nursing officers should see to it that a patient's medication is adjusted by a nurse specialist or other expert in Parkinson's. Chief nursing officers need to put in place schemes to enable patients to administer their own medication. Wherever there is a ward with a PD patient, there should be a nurse responsible for administering the medication, as the noble Baroness, Lady Barker, rightly mentioned.
	It is not as if there are no standards in place. There are well established standards: there is an NSF, there are medicines management frameworks and there are draft NICE guidelines. All too often they are not followed. Rule one, which is also often not followed, is to listen to the patient. The answer to much of this lies in basic training in hospitals—and in care homes, where the problem is equally bad if not worse. I am thinking particularly of the training of nurses. Does Parkinson's disease actually feature in the nurse training curriculum?
	There is a lot of good stuff in the Government's recent White Paper, Our Health, Our Care, Our Say, and many of the proposals relating to long-term conditions ought to benefit Parkinson's patients directly. I am thinking of the funding coming forward to promote self-help among patients, the idea of having managed networks of professionals bridging the divide between health and social care, and, crucially, helplines and respite support for carers.
	I pay tribute to the Government for what they have done for carers. We have come a long way since 1999 when the national strategy came out. But it is still true, unfortunately, that many carers are completely ignorant of the support that they are entitled to from social services and many are all too easily inclined to ignore the physical and mental toll that caring exacts on them. Half of all carers have back problems because of lifting and half suffer from some sort of stress-related illness. The noble Baroness, Lady Finlay, was right to emphasise that. All full-time carers need an outlet and a source of professional advice. It is often a lonely existence. The more that carers know they are not alone, the better their lives will be; and the better the lives will be of those for whom they care.
	One particularly notable source of help for Parkinson's patients and their carers, and a source of help that is not often mentioned—I do not think that it has been mentioned today—is pharmacists. The preliminary results of a pilot study have just been published in which a number of community pharmacies offered structured consultations with PD patients or their carers over a six-month period. The pharmacists talked to patients about their medicines and about any concerns that the patients had. They gave advice on side effects, drug interactions, which is very important, and diet and practical tips on how best to take medication. Eighty-two per cent of patients said that the advice they received from the pharmacist was helpful and more than 70 per cent said that they had gained greater benefit from their medicines. Last week in Milton Keynes, the National Association of Women Pharmacists held its conference. More than one speaker made the point that pharmacists are ideally placed to offer advice and help to carers on such things as home deliveries and even the filling out of benefits claim forms.
	Benefits are a difficult area for Parkinson's patients. I mentioned just now the need to bridge the divide between healthcare and social services, as recognised in the White Paper. Nowhere is that more relevant than with a condition such as Parkinson's: it is that divide which sometimes makes it hard for someone to demonstrate on the one hand that they have a clear need for nursing care, such as might be provided by the NHS, and on the other hand that they also require help and support in daily personal tasks such as getting dressed. It is interesting and reassuring to see that the numbers of Parkinson's patients claiming disability living allowance has steadily risen over the past 10 to 12 years. Yet we know, from the recent CAB report, that all too often there are flaws in the quality of the medical assessments on which decisions about benefit entitlements are based. Too many decisions go to appeal and success rates at appeal are very high for both DLA and incapacity benefits. The CAB concluded that too often evidence from the Atos Origin doctor is preferred over other evidence supplied by carers and by practitioners who are a good deal more familiar with the applicant's condition.
	Quite a lot of criticism has been levelled at the use of computer-aided decision-making for incapacity benefit and the fact that there is not very much transparency in that process. I do not know whether the Minister is briefed to comment on that, but if not, perhaps he would be good enough to take the point away with him. The last major debate we had about Parkinson's disease was initiated by the noble Lord, Lord Harrison, about four years ago. At that time one of the main concerns was the shortage of neurologists in the UK and the shortage of nurse specialists. The Minister who replied to the debate, the noble Lord, Lord Hunt of Kings Heath, tried to reassure us by citing the number of extra consultant neurologist posts that would be created by 2009. That seemed rather a long way away then, but I wonder if the Minister can tell us whether we are on track to create and fill those new consultant posts. There is no question that even with all the NSFs and NICE guidelines that we could wish for, without enough neurologists, PD patients will be short-changed by the health service.
	As regards nurse specialists, I was particularly sorry to read that as a direct result of current funding pressures, West Cheshire PCT has withdrawn its nurse specialist service. One fears and suspects that it is exactly this kind of service, which is outside the scope of government targets, that will suffer over the months ahead, as a result of funding constraints and NHS reconfiguration. We need to remind ourselves that, for all the Government's fanfares about total nurse numbers, which I acknowledge, the numbers of district nurses and health visitors have dropped markedly since 1997. That is not good news for PD patients.
	What do we want to see emerging from the debate? We want to see some action by the Department of Health and the Healthcare Commission to promote proper implementation of standards in medicines management by nurses and hospital staff. We want to see the National Patient Safety Agency focusing on what goes wrong in both hospitals and care homes so as to make medicines management a much higher priority. I am sure that we would all like some action in relation to nurse training and in the NVQs for care workers. We want to see the draft NICE guideline for PD become the template for standard practice throughout primary and secondary care and we must ensure that all PD patients have access to a nurse specialist, as the noble Baroness, Lady Morgan, rightly emphasised, because we know how effective and cost-effective nurses are in keeping patients out of hospital.
	That is not a bad shopping list and not an unreasonable one and I hope that the Minister can give us some reassurance.

Lord Warner: My Lords, I congratulate my noble friend Lady Gale on securing this debate. I welcome the opportunity to debate such an important topic and the constructive and practical debate that we have had. I am not sure whether I will be able to respond to all the noble Earl's shopping list, but I will do my best.
	I understand the seriousness of the condition, as my mother suffers from Parkinson's and I have seen the impact of it on her daily living and communications skills. I understand the practical consequences of this particular condition. I identify with the story that the noble Earl told and the other concerns that have been expressed about what happens to medication on admission to hospital. I can identify with that because I have had similar experiences in relation to my own mother. It is a very difficult issue when people go into hospital; older people in particular can go in in an emergency for something else, but what then happens to their medication on the point of admission and in terms of getting people to keep their Parkinson's medication balanced?
	Last week was Parkinson's awareness week. I wish to start by recognising the importance of raising public awareness of the issues most important to those who live with the disease; not just the people who have the disease, but their carers and families too. I pay wholehearted tribute to the Parkinson's Disease Society for the important part it plays in providing support, advice and information to people who live with Parkinson's every day. The society is an essential part of the support and care that is now on offer in this country, and it should be proud of the work that it has done in recent years.
	The background to today's debate is the transformation of care, particularly for older people. Although Parkinson's can afflict younger people, it predominately affects people over 50: both men and women. Before turning to some of the specific actions to help people with Parkinson's disease, let me say a few words on the improvements in support for older people at home, which benefits Parkinson's disease sufferers. Older citizens have been first in line to benefit from health and care reform.Homes with home care are up 52 per cent since 1998–99. The number of older people helped intensively to live at home has increased steadily from 23 per cent in that year, to 32 per cent in 2004–05, exceeding the target of 30 per cent by March 2006. People are having to spend less time in acute hospitals, which is good for them and better value for money.
	Those successes are very much the result of implementation of our idea that, for most people, the best care home is their own home. We have made this possible through free nursing care in all settings including the individual's own home achieved in October 2001, paid for by the NHS. There is free community equipment and intermediate care services from social services and rapid assessments for social care services, so they begin within 48 hours and are completed within four weeks. Following assessment, the services people need should be in place within four weeks.
	I turn to some of the specific measures to assist people living with Parkinson's and shall respond to some of the points made by noble Lords. First, I shall deal with the National Service Framework for Long-term Conditions. We take the needs of those living with long-term neurological conditions, such as Parkinson's disease, seriously, and have ensured support for the future through the framework. It focuses on improving services for people with neurological conditions across England. People with those conditions will get faster diagnosis, more rapid treatment and a comprehensive package of care under the NSF. In addition, all people with long-term conditions will be supported to live as full and independent lives as possible. It is an ambitious plan, and I acknowledge that we will not achieve it overnight because it is a 10-year plan.
	We have commissioned NICE to produce a clinical practice guideline on Parkinson's disease for the NHS in England and Wales in consultation with stakeholders. A number of noble Lords mentioned that. I understand that the current draft deals with the issue of access to specialist nurses.
	The subject of research came up a number of times during this debate. We are continually striving, together with the Parkinson's Disease Society, to find a cure and a treatment for those with Parkinson's disease. As the noble Baroness, Lady Finlay, said, this is a difficult area of research. At present, the medical profession has no means of curing Parkinson's disease or preventing it developing, but we hope that through research we may one day find the answers. For now, it is possible only to minimise symptoms through medication and offer comprehensive support through our health and social care services.
	I shall respond to the point made by the noble Baroness, Lady Barker, about the £20 million research initiative. We established it to speed up the development of new medical treatments for dementia and neurodegenerative disease. The dementias and neurodegenerative disease research network will be led by teams from University College, London and the University of Newcastle-upon-Tyne. We are funding that work. I cannot say today how far that network extends outside the UK, but I shall look into that point, which was raised by my noble friend Lord Harrison.
	My noble friend Lady Gale and other noble Lords raised a number of issues about medicines management. We agree on the need to ensure that medicines are managed properly. I accept that ensuring that patients receive their medicines at the correct time to maintain control of involuntary movements is critical for the effective management of Parkinson's disease. On average, patients take their medicines four times daily, but some patients need to take them as many as 14 times daily. Making sure that that happens in hospital is undoubtedly challenging. A new scheme is being piloted where people in hospital who have Parkinson's disease will access their medicines from their own locked cabinet and will self-medicate. The scheme was developed following feedback from 250 service users that showed that only 52 per cent of patients received their medicine at the correct time. The Healthcare Commission has made medicines management one of the three key targets of inspections this year. The inspections will include a patient satisfaction survey that will identify the extent to which patients can self-medicate from medicines under their control.
	I reassure the noble Baroness, Lady Barker, that the Department of Health is providing funding to improve medicines management through the team based at the national prescribing centre, which has been helping NHS organisations improve their medicines management services since 2001. The Medicines Management Collaborative has worked with 146 PCTs throughout England and has 44 trusts currently participating in the programme. The community pharmacy framework collaborative has 28 host PCTs participating in the programme, together with a number of associate PCTs and the integrated medicines management programme currently has 25 trusts participating. That sounds very complicated, and I will confirm it in writing if noble Lords want more information, but it shows that there is a lot of activity in this area to secure improvements.
	The noble Baroness, Lady Gale, and a number of other noble Lords raised the issue of prescription charges. In 2004–05, 87 per cent of all prescription items dispensed in England were exempt from prescription charges. Over the same period, prescription charges raised £422 million for the NHS. The majority of Parkinson's disease sufferers are exempt under age exemptions in these circumstances. Since its introduction in 1968, there have been numerous calls to extend the list of medical conditions that are given prescription charge exemption to include all other medical conditions. These have never produced a consensus. Most recently the matter was looked at in 1998, but we have no plans to emulate the position in Wales.
	A number of noble Lords have raised the issue of access to Parkinson's disease nurse specialists. As my noble friend Lady Morgan said, there are currently 200 Parkinson's disease nurses across the United Kingdom. We commend the work of the Parkinson's Disease Society in this area and its aim to recruit 30 to 40 new specialist nurses each year, with the eventual aim of ensuring that all those with Parkinson's disease have access to a specialist nurse. This is in addition to the initiative taken by the Government through the national service framework. I can reassure my noble friends that we support maximising the use of the specialised skills of Parkinson's disease nurse specialists. That is certainly our wish but I cannot give an absolute assurance that every PCT in the country will take notice of what the Minister says in this House.
	We agree that there is a need to continue working to improve the support and services provided for carers. I am grateful for the supportive remarks of the noble Earl, Lord Howe. My noble friend Lady Morgan has mentioned the expert carers' programme, which we intend to expand. I recognise that that idea was not thought up in Whitehall but was brought to us by the Alzheimer's Society. Carers who work with patients or users of social care are working with people whom they love very much and whom they want to support in ways that best suit the person with Parkinson's and their family. However, they are often denied information about how best they can help. That is why we want to expand the expert patient programme and the expert carers' programme, to develop these kinds of networks and provide a stronger basis of support.
	We have done a lot for carers and I want to underline the fact that we will continue to provide that support. In the time available, I cannot say any more about some of the issues that are in play here. We accept, however, the need to expand and develop the carers' strategy and we have committed ourselves to doing so. We do not have a firm date by which that will be published because we are continuing to work with carers themselves so that we can get it right for them.
	It is worth saying a few words about a point that has arisen now and again, which concerns improving the knowledge and understanding of health professionals in this area, including GPs. One example of the way in which care staff are supported is a project called Prodigy, which is an online, up-to-date, interactive, decision-support system. It is a source of clinical knowledge that can help healthcare professionals and patients to manage the common conditions generally seen in primary care and first-contact care. It is interesting that the section of Prodigy devoted to diagnosis, treatment and management of Parkinson's expressly recommends the Parkinson's Disease Society as a source of information and support. That is an example of how the society and its programmes are well and truly embedded in our health and social care systems.
	A number of noble Lords have mentioned the White Paper Our health, our care, our say. I do not have time to go into great detail on this other than to say that it will address many of the concerns that have been expressed about the need for greater support for people with long-term conditions. The White Paper will produce a major change of emphasis and a major change in the use of resources.
	I say to the noble Baroness, Lady Barker, that the new primary care trust reconfigurations will be announced shortly and will be in place by 1 October. Part of the challenges that trusts will continue to face is ensuring that practice-based commissioning not only is rolled out by the end of this year, which is our commitment, but will start to produce some real benefits. The purpose of practice-based commissioning is to bring commissioning of services closer to patients so that their family doctor, the primary care services, can respond to their needs. That should be a continuing benefit to people with long-term conditions such as Parkinson's.
	The noble Earl, Lord Howe, and, I think, others mentioned pharmacists' contribution. He is exactly right; they have a big role to play, and the new pharmacists' contract will facilitate a more prominent community role for pharmacists in helping patients.
	I do not have time to make more extensive remarks, so I will respond in writing to the points that I have not covered. I hope that the noble Baroness, Lady Gale, will agree with me that the Government have recognised the issues important to people living with Parkinson's and are attempting to tackle them on a co-operative and partnership basis with bodies such as the Parkinson's Disease Society. I believe that the initiatives I have described will help to make life better but I also accept that there is still a long way to go and that we need to work together at helping people to cope with this difficult disease.

House adjourned at seventeen minutes past six o'clock.
	Thursday, 4 May 2006.